The current artificial intelligence (AI) hype looks to me like a modern gold rush — a wave of rapid growth and opportunity. But just like in the actual historical gold rush, it’s not always easy to know where to stake your claim, especially in an industry as dynamic and swiftly evolving as AI.
But before you grab your digital pickaxe and start digging for AI stocks, let’s talk about a safer and smarter way to join this gold rush — through diversification.
In my opinion, trying to pick the winners in a rapidly changing industry like AI is like trying to predict lottery numbers. One of the better ways to tackle this uncertainty is by spreading out your investment across a diverse range of AI-related companies.
This is where exchange-traded funds (ETFs) come in. Think of ETFs as a treasure map, leading you to a diversified trove of AI stocks. You get to stake your claim in multiple promising AI ventures, without the risk of going all-in on a single stock.
Here are three picks from Horizons ETFs that provide exposure to the AI-related themes of semiconductors, big data, and robotics & automation. It’s like investing in the supplies and tools used during a gold rush — not as flashy as the gold itself, but absolutely crucial for sustaining the entire operation.
Semiconductors
Semiconductors, known as the “brains” behind modern electronics, are the foundation upon which all AI technology is built. By investing in the semiconductor industry, you’re effectively gaining exposure to the broader AI market, as advancements or successes in AI will likely translate into increased demand.
My ETF pick here is Horizons Global Semiconductor Index ETF (TSX: CHPS). By tracking the Solactive Capped Global Semiconductor Index, you get access to some of the leading chip maker stocks from around the world. The ETF charges a 0.55% expense ratio, or $55 for a $10,000 investment.
Big Data
AI thrives on the ability to analyze and learn from vast amounts of data, making big data the fuel that drives AI’s engine. As the usage and demand for AI systems grows, so does the need for big data and the hardware infrastructure that supports the processing power needed by these enterprises.
The ETF pick for this theme is Horizons Big Data & Hardware Index ETF (TSX: HBGD). By tracking the Solactive Big Data and Hardware Index, investors get exposure to global companies that focus on data development, storage, and hardware services for a 0.55% expense ratio.
Robotics & automation
Robotics and automation are the practical applications that bring AI to life. This sector transforms AI’s theoretical prowess into tangible operations, creating real-world solutions that enhance productivity. Thus, investing in robotics and automation offers exposure to the AI, and a myriad of industries revolutionized.
My ideal ETF pick here is Horizons Robotics and Automation Index ETF (TSX: RBOT), which tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index. For a 0.60% expense ratio, investors gain exposure to global companies that play a key role in developing robotics and automation solutions.
