The AI market is expected to reach $305.90 billion in 2024, with a market volume of $738.80 billion by 2030, according to Global X.
While AI is a familiar theme for investors, its potential now extends across multiple sectors, giving rise to innovative applications in sectors such as agriculture and healthcare.
Locally, Global likely to benefit from the AI boom, notes Marc Jocum, investment strategist.
According to him, this theme is here to stay, especially as AI enters the commercialization phase.
“What many index providers and ETF issuers are looking at is…how can we be broader? How can he be interested in other channels, other value chains?
“What initially started with semiconductors is expanding to other areas, such as infrastructure, data centers and renewable energy. There is a very wide range of applications for the development of this AI ecosystem, which tells me that investors are interested in this appetite. It’s a theme that’s not going to go away.
Notably, robotics and artificial intelligence ETFs have seen their popularity more than double compared to 2023. Meanwhile, local investors had already invested $30 million in AI-beneficial cybersecurity ETFs, as of March this year, a stark contrast to the $270,000 in net flows recorded. for the whole of 2023.
As such, Jocum explained that an ETF wrapper is the ideal vehicle for investors to reap the rewards.
“ETFs have a diverse basket of players in the AI space, and if a particular company wastes its capital expenditures or doesn’t quite realize its earnings expectations, it could have a significant impact on the share price,” he said.
“If you look at the earnings growth of the companies that make up the NASDAQ-100, as they invest heavily in AI, that investment pays dividends and they still generate just as much free cash flow. So despite their investment spending on AI, they continue to generate very strong profit growth.
At the same time, Gleeson noted that there could be a series of companies operating in adjacent spaces that could have very strong upside potential, but would take much longer to come to fruition.
In this context, the investment strategist agrees that diversification is essential.
“Because you have this diversity… it means you will be less beholden to the risks associated with a particular application of AI,” he concluded.
