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The year 2023 can be long-remembered for the emergence of the Artificial Intelligence (AI) boom. Though the craze ruled the first half of this year, the hype fizzled in the second half due to rising rate worries that weighed on growth sectors like technology.
As a result, AI ETFs like iShares Robotics and Artificial Intelligence Multisector ETF (IRBO - Free Report) , ROBO Global Robotics & Automation Index ETF (ROBO - Free Report) , Global X Artificial Intelligence & Technology ETF (AIQ - Free Report) and First Trust Nasdaq Artificial Intelligence & Robotics ETF (ROBT - Free Report) lost in the range of 4.4% to 8%, respectively, in the past one month (as of Oct 6, 2023).
Against this backdrop, below, we highlight a few reasons for which AI ETFs should be tracked closely to employ the buy-the-dip strategy.
AI Boom Takes Over Corporate America
According to a recent survey conducted by KPMG, more than two-thirds of U.S. CEOs consider investment in generative AI a primary priority for their companies, as quoted on Yahoo Finance. KPMG U.S. chair Paul Knopp emphasized that this focus on AI is not mere hype but a genuine acknowledgment of its disruptive potential.
The release of ChatGPT by OpenAI has ignited an AI boom in corporate America. Prominent companies like Amazon, Meta, and Zoom are making substantial investments in AI. Amazon announced a $4 billion investment in AI startup Anthropic, Meta introduced new generative AI tools for advertisers, and Zoom unveiled AI products to compete with tech giants Microsoft and Google, both of which have backed OpenAI.
AI Uptake: A Trillion-Dollar Opportunity?
Dan Ives of Wedbush Securities predicts that there will be a trillion dollars of additional spend over the next decade in the AI sector. It’s a tectonic shift like the emergence of the Internet in 1995 and the launch of the Apple iPhone in 2007. AI has persistently flooded every sector of the society. From healthcare to transportation, entertainment to cybersecurity, AI has left its presence in every industry.
Goldman Sachs predicts a rapid acceleration in AI investments, reaching approximately $200 billion globally by 2025. Over the long term, Goldman envisions AI-related investments peaking at as high as 4% of the U.S. GDP. However, Jefferies senior analyst Brent Thill suggests that Microsoft, Amazon, and Google will likely emerge as winners as corporate spending shifts toward AI, cautioning that it's not a zero-sum game.
Patience Required for Returns
While businesses are prioritizing AI investments, it may take time for these investments to yield returns. KPMG's survey found that 62% of CEOs expect to see a return on their AI investments within three to five years, while 23% anticipate returns in just one to three years.
Knopp noted that AI investments are currently in a nascent stage, primarily centered around ideation, and predicted increasing use cases of generative AI across various industries. The potential for disruption is reflected in the survey results, with CEOs recognizing the transformative power of AI.
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Time to Buy the Dip in AI Stocks & ETFs?
The year 2023 can be long-remembered for the emergence of the Artificial Intelligence (AI) boom. Though the craze ruled the first half of this year, the hype fizzled in the second half due to rising rate worries that weighed on growth sectors like technology.
As a result, AI ETFs like iShares Robotics and Artificial Intelligence Multisector ETF (IRBO - Free Report) , ROBO Global Robotics & Automation Index ETF (ROBO - Free Report) , Global X Artificial Intelligence & Technology ETF (AIQ - Free Report) and First Trust Nasdaq Artificial Intelligence & Robotics ETF (ROBT - Free Report) lost in the range of 4.4% to 8%, respectively, in the past one month (as of Oct 6, 2023).
Against this backdrop, below, we highlight a few reasons for which AI ETFs should be tracked closely to employ the buy-the-dip strategy.
AI Boom Takes Over Corporate America
According to a recent survey conducted by KPMG, more than two-thirds of U.S. CEOs consider investment in generative AI a primary priority for their companies, as quoted on Yahoo Finance. KPMG U.S. chair Paul Knopp emphasized that this focus on AI is not mere hype but a genuine acknowledgment of its disruptive potential.
The release of ChatGPT by OpenAI has ignited an AI boom in corporate America. Prominent companies like Amazon, Meta, and Zoom are making substantial investments in AI. Amazon announced a $4 billion investment in AI startup Anthropic, Meta introduced new generative AI tools for advertisers, and Zoom unveiled AI products to compete with tech giants Microsoft and Google, both of which have backed OpenAI.
AI Uptake: A Trillion-Dollar Opportunity?
Dan Ives of Wedbush Securities predicts that there will be a trillion dollars of additional spend over the next decade in the AI sector. It’s a tectonic shift like the emergence of the Internet in 1995 and the launch of the Apple iPhone in 2007. AI has persistently flooded every sector of the society. From healthcare to transportation, entertainment to cybersecurity, AI has left its presence in every industry.
Goldman Sachs predicts a rapid acceleration in AI investments, reaching approximately $200 billion globally by 2025. Over the long term, Goldman envisions AI-related investments peaking at as high as 4% of the U.S. GDP. However, Jefferies senior analyst Brent Thill suggests that Microsoft, Amazon, and Google will likely emerge as winners as corporate spending shifts toward AI, cautioning that it's not a zero-sum game.
Patience Required for Returns
While businesses are prioritizing AI investments, it may take time for these investments to yield returns. KPMG's survey found that 62% of CEOs expect to see a return on their AI investments within three to five years, while 23% anticipate returns in just one to three years.
Knopp noted that AI investments are currently in a nascent stage, primarily centered around ideation, and predicted increasing use cases of generative AI across various industries. The potential for disruption is reflected in the survey results, with CEOs recognizing the transformative power of AI.