AI ETF's - How to invest in artificial intelligence

AI ETFs have delivered strong returns in recent years, driven by the rapid adoption of artificial intelligence technologies across all sectors.

In 2025, however, AI ETFs have faced increased volatility, as investors worry about market corrections, changing interest rates, and the sustainability of AI-related stock valuations.

Despite short-term fluctuations, AI remains a transformative force in technology, with long-term growth potential.

In this article, we discuss what AI ETFs are, how they invest, the different types available, their advantages and risks, and which types of investors may add them to their portfolios.

What are AI ETFs and how do they invest?

AI ETFs are funds that invest in companies involved in artificial intelligence, machine learning, and automation. These ETFs typically hold shares of companies that develop AI-powered software, semiconductor chips, and cloud computing technologies.

Some of the most common holdings in AI ETFs include major technology companies such as Nvidia Corp. (NVDA), Alphabet Inc. (GOOG), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META). These companies are at the forefront of AI developments and offer everything from AI-powered cloud computing to generative AI models such as ChatGPT and Gemini, as well as autonomous systems.

AI ETFs may also invest in specialized AI-driven companies, including leaders in the semiconductor industry such as Advanced Micro Devices Inc. (AMD), enterprise AI companies such as Palantir Technologies Inc. (PLTR), and robotics companies such as Intuitive Surgical Inc. (ISRG).

By investing in AI ETFs, investors gain diversified exposure to multiple companies driving innovation in the AI sector.

Types of AI ETFs and examples

AI stock ETFs are broadly divided into several types based on their investment strategy.

Broad AI-focused ETFs

These funds invest in a range of companies involved in AI and automation. Examples include:

• Global X Artificial Intelligence & Technology ETF (AIQ)

• iShares Future AI & Tech ETF (ARTY)

Semiconductor ETFs

These ETFs primarily hold chip manufacturers that provide the computing power for AI systems. Examples include:

• VanEck Semiconductor ETF (SMH)

• iShares Semiconductor ETF (SOXX)

Thematic AI ETFs

These ETFs focus on specific AI applications such as automation, robotics, and self-driving technology. Examples include:

• ARK Autonomous Technology & Robotics ETF (ARKQ)

• ROBO Global Robotics & Automation ETF (ROBO)

Large technology ETFs

These funds allocate most or all of their holdings to large technology companies, many of which are leading AI adoption. Examples include:

• Invesco QQQ Trust (QQQ)

• Technology Select Sector SPDR Fund (XLK)

Pros and cons of investing in AI ETFs

ETFs that invest in AI stocks offer many potential advantages, including long-term growth potential and diversification. However, there are also some potential risks and drawbacks investors should consider before purchasing these funds.

Advantages

• Long-term growth potential: AI is expected to drive innovation across all industries, creating demand for AI-driven services and products.

• Diversification: AI stock ETFs provide exposure to multiple AI-related stocks, reducing company-specific risk.

• Access to leading AI companies: Investors gain access to major technology giants and emerging AI companies without having to select individual stocks.

Disadvantages

• High valuations: Many AI stocks trade at high valuations, making them vulnerable to sharp corrections.

• High market risk: AI stocks can be volatile, especially during market downturns or periods of elevated valuations.

• Regulatory risks: Government oversight or concerns about data privacy, ethics, and monopolistic practices could impact AI companies.

Who are AI ETFs suitable for?

Artificial intelligence ETFs can be a smart addition to an investment portfolio, but they are not ideal for everyone. Below are examples of investors who may or may not want to invest.

Ideal investors for AI ETFs

• Long-term investors who believe in the transformative potential of AI

• Growth-oriented investors willing to accept short-term volatility for potentially high returns

• Technology-focused investors seeking exposure to AI without selecting individual stocks

Investors who should be cautious

• Risk-averse investors who prefer stability over high growth and volatility

• Income-focused investors seeking dividend-paying stocks rather than growth-oriented companies

• Short-term traders who may be exposed to unpredictable market fluctuations

Conclusion on investing in AI stock ETFs

AI stock ETFs are an attractive investment option for those looking to benefit from the growth of artificial intelligence and automation. While short-term volatility has impacted AI stocks in 2025, the long-term investment case remains strong.

By understanding the different types of artificial intelligence ETFs, their advantages and risks, and by aligning investments with individual risk tolerance and financial goals, investors can make informed decisions about investing in AI through ETFs.