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4 ETFs to Tap the Renewed AI Craze on Wall Street

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After a brief lull, the fervor for artificial intelligence (AI) investments is back with a bang on Wall Street. This revival has been buoyed by upbeat quarterly performances of tech biggies like Microsoft (MSFT - Free Report) and Alphabet (GOOGL - Free Report) , coupled with a successful IPO debut for Rubrik (RBRK - Free Report) last week (read: Alphabet Joins $2T Club, More Growth Likely: ETFs to Win).

This puts focus on AI ETFs like Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) , iShares Robotics And Artificial Intelligence Multisector ETF (IRBO - Free Report) , First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT - Free Report) and Themes Generative Artificial Intelligence ETF (WISE - Free Report) .

Stellar Performances by Some Tech Titans

Microsoft and Alphabet, two behemoths in the tech industry, delivered outstanding quarterly results, reigniting confidence in the potential of AI-driven growth. Microsoft's Azure cloud division witnessed a handsome 31% revenue jump, with considerable contribution from AI services. Similarly, Google reported a surge of 28% in its cloud revenues, attributing the growth to increasing contributions from AI technologies.

Concrete Evidence of AI Demand

Analysts point out that the robust performances of Microsoft and Google provide tangible evidence of the real demand for AI solutions. For those who were skeptical about the tangibility of the AI boom, recent announcements of material investments in AI by Microsoft, Meta and Alphabet acted as an eye-opener.

Although the AI race is often led by Microsoft and Google, its scope goes beyond these tech giants. Despite recent pullbacks, analysts are bullish on Meta’s initiatives. Many Wall Street analysts are thus recommending buying into such opportunities.

Elon Musk called Tesla (TSLA) an AI and Robotics company, not just an auto company. Tesla's self-driving vehicles will be based on its AI-based self-driving technology called FSD V12. Elon Musk also indicated that any company that isn't outlaying $10 billion on AI this year, like Tesla, will not be able to keep pace.

Samsung Electronics, the world's largest memory chip maker, forecast that demand for artificial intelligence would hold strong and tighten the supply of some high-end chips. The company reported a more than 10-times rise in first-quarter operating profit.

Samsung looks to boost the supply of high bandwidth memory (HBM)-related chips in 2024 by more than three-fold versus last year. These chips are used in generative AI chipsets. Samsung intends to leverage the AI boom that has benefited its smaller peer SK Hynix, which had been the sole supplier of HBM3 chips to NVIDIA, per Reuters.

Anticipating Key Earnings Reports

As the AI frenzy continues, all eyes are on upcoming earnings reports from tech giants like Amazon and Apple. Amazon is slated to report today, after market close. These reports can serve as critical tests for the AI tech trade amid soaring valuations. Notably, Amazon expects to generate tens of billions of dollars for its cloud business through AI initiatives.

Amazon has an Earnings ESP of +7.51% and a Zacks Rank #2 (Buy). According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter (read: Why Should You Buy Amazon ETFs Ahead of Q1 Earnings?).

Amazon invented and delivered a new service (Amazon Bedrock) that allows companies to use pre-existing functional modules to build GenAI applications. Also, Amazon launched one of the most capable coding assistants around in Amazon Q. In March, Amazon increased its investment in the AI startup Anthropic, injecting another $2.75 billion to bring its total investment to $4 billion.

Apple, which will report on May 2, will likely unveil AI initiatives later this year, although we expect the company to shed light on its AI moves in its post-earnings analyst call this quarter. The company reportedly acquired Canadian AI startup DarwinAI earlier this year, which has developed technology that makes AI technology accessible to a wide variety of industries.

ETFs in Focus

With AI technology rapidly advancing and becoming increasingly integral to various industries, investors must be looking for ways to capitalize on this trend. Below, we highlight a few AI-focused ETFs for investors.

Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) – Expense Ratio: 0.69%; Up 4% past week

iShares Robotics And Artificial Intelligence Multisector ETF (IRBO - Free Report) – Expense Ratio: 0.47%; Up 3.6% past week

First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT - Free Report) – Expense Ratio: 0.65%; Up 3.6% past week

Themes Generative Artificial Intelligence ETF (WISE - Free Report) – Expense Ratio: 0.35%; Up 5% past week

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