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Transportation ETFs Move Into Top Gear With AI in the Driving Seat
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From Wall Street to warehouses, artificial intelligence (AI) has become a powerful tool and is being integrated in all major sectors across the global economy. The transportation sector is no exception, with GDP from the U.S. Transportation and Warehousing amounting to a solid $744 billion in the second quarter of 2025 (as per Trading Economics data).
Looking back at the sector’s performance this year reveals that it has gradually transformed from a slow-growth, defensive corner of the market into a dynamic field for innovation, driven not only by electric vehicles but by a comprehensive, AI-powered overhaul of its entire operational DNA.
This technological overhaul is visibly improving the sector's performance, which calls for investor attention to key transportation Exchange Traded Funds (ETFs), which have actually delivered better performance than last year.
But before delving deep into these ETFs, let us try to analyze how AI is transforming the transportation sector and, by extension, has been driving the performance of transportation ETFs.
The AI Revolution in Transportation: Beyond Self-Driving Cars
Beyond the well-known application in electric vehicles (EVs) and autonomous driving, AI has penetrated the logistics arteries of the industry. Companies are leveraging AI to navigate severe challenges, including driver shortages, rising operational costs and persistent supply chain disruptions.
This is done by implementing warehousing, optimizing shipping routes to minimize fuel consumption and implementing predictive maintenance for entire vehicle fleets.
In addition to these, AI is also contributing with remotely-operated drones infused with AI coding, which are helping to deliver vital medical supplies to some of the remotest regions. For example, U.S.-based drone start-up Zipline operates the world's first commercial blood donation system in Rwanda, providing life-giving blood and plasma where conventional logistical processes cannot reach (as per a report by Statista).
Such data-driven transformation is attracting significant investor interest, translating into a promising performance boost for the entire sector.
The Case for ETFs: Profiting from Smart Transportation
The aforementioned operational transformation is creating substantial profitability for companies that are enabling and adopting these technologies. The investment opportunity thus extends beyond traditional trucking and logistics firms to encompass a new ecosystem of "smart transportation."
This ecosystem includes not only traditional transportation companies like Union Pacific (UNP - Free Report) but also those developing foundational technologies. These include technology giants like NVIDIA (NVDA - Free Report) and Taiwan Semiconductor (TSM - Free Report) , which provide the essential computing power and chips, alongside automotive innovators.
Another example is Lumentum (LITE - Free Report) , which produces high-performance industrial lasers used in the precision manufacturing of products with exacting standards, including automobiles and semiconductor chips.
This direct link between AI integration, improved corporate fundamentals and investor returns shines a spotlight on transportation ETFs as a strategic vehicle to capture this sector-wide growth.
ETFs Rallying on This AI-Driven Ascent
As we approach the end of 2025, investors seeking exposure to the aforementioned growth trend may tap into the strength through the following ETFs.
This fund, with assets worth $870.5 million, offers exposure to 44 U.S. airline, railroad, and trucking companies. Its top three holdings are Uber Technologies (20.16%), UNP (15.86%) and United Parcel (7.54%).
IYT rose 4.1% in 2024 and has gained 12.6% year to date. The fund charges 38 basis points (bps) as fees.
State Street SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report)
This fund, with assets under management (AUM) worth $21.6 million, offers exposure to 79 companies whose products and services are driving innovation behind smart transportation. Its top three holdings are Lumentum (3.25%), Garett Motion (2.23%) and Ballard Power (2.16%).
HAIL lost 7% in 2024 but has surged 23.5% year to date. The fund charges 45 bps as fees.
This fund provides exposure to companies involved in the manufacturing, development, distribution, and servicing of autonomous or electric vehicles. Its top five holdings are Amphenol (7.09%), Alphabet (5.99%), TSM (5.73%), Quanta Services (5.14%) and NVDA (4.97%).
MOTO gained 2% in 2024 and has soared 28.2% year to date. The fund charges 102 bps as fees.
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Transportation ETFs Move Into Top Gear With AI in the Driving Seat
From Wall Street to warehouses, artificial intelligence (AI) has become a powerful tool and is being integrated in all major sectors across the global economy. The transportation sector is no exception, with GDP from the U.S. Transportation and Warehousing amounting to a solid $744 billion in the second quarter of 2025 (as per Trading Economics data).
Looking back at the sector’s performance this year reveals that it has gradually transformed from a slow-growth, defensive corner of the market into a dynamic field for innovation, driven not only by electric vehicles but by a comprehensive, AI-powered overhaul of its entire operational DNA.
This technological overhaul is visibly improving the sector's performance, which calls for investor attention to key transportation Exchange Traded Funds (ETFs), which have actually delivered better performance than last year.
But before delving deep into these ETFs, let us try to analyze how AI is transforming the transportation sector and, by extension, has been driving the performance of transportation ETFs.
The AI Revolution in Transportation: Beyond Self-Driving Cars
Beyond the well-known application in electric vehicles (EVs) and autonomous driving, AI has penetrated the logistics arteries of the industry. Companies are leveraging AI to navigate severe challenges, including driver shortages, rising operational costs and persistent supply chain disruptions.
This is done by implementing warehousing, optimizing shipping routes to minimize fuel consumption and implementing predictive maintenance for entire vehicle fleets.
In addition to these, AI is also contributing with remotely-operated drones infused with AI coding, which are helping to deliver vital medical supplies to some of the remotest regions. For example, U.S.-based drone start-up Zipline operates the world's first commercial blood donation system in Rwanda, providing life-giving blood and plasma where conventional logistical processes cannot reach (as per a report by Statista).
Such data-driven transformation is attracting significant investor interest, translating into a promising performance boost for the entire sector.
The Case for ETFs: Profiting from Smart Transportation
The aforementioned operational transformation is creating substantial profitability for companies that are enabling and adopting these technologies. The investment opportunity thus extends beyond traditional trucking and logistics firms to encompass a new ecosystem of "smart transportation."
This ecosystem includes not only traditional transportation companies like Union Pacific (UNP - Free Report) but also those developing foundational technologies. These include technology giants like NVIDIA (NVDA - Free Report) and Taiwan Semiconductor (TSM - Free Report) , which provide the essential computing power and chips, alongside automotive innovators.
Another example is Lumentum (LITE - Free Report) , which produces high-performance industrial lasers used in the precision manufacturing of products with exacting standards, including automobiles and semiconductor chips.
This direct link between AI integration, improved corporate fundamentals and investor returns shines a spotlight on transportation ETFs as a strategic vehicle to capture this sector-wide growth.
ETFs Rallying on This AI-Driven Ascent
As we approach the end of 2025, investors seeking exposure to the aforementioned growth trend may tap into the strength through the following ETFs.
iShares U.S. Transportation ETF (IYT - Free Report)
This fund, with assets worth $870.5 million, offers exposure to 44 U.S. airline, railroad, and trucking companies. Its top three holdings are Uber Technologies (20.16%), UNP (15.86%) and United Parcel (7.54%).
IYT rose 4.1% in 2024 and has gained 12.6% year to date. The fund charges 38 basis points (bps) as fees.
State Street SPDR S&P Kensho Smart Mobility ETF (HAIL - Free Report)
This fund, with assets under management (AUM) worth $21.6 million, offers exposure to 79 companies whose products and services are driving innovation behind smart transportation. Its top three holdings are Lumentum (3.25%), Garett Motion (2.23%) and Ballard Power (2.16%).
HAIL lost 7% in 2024 but has surged 23.5% year to date. The fund charges 45 bps as fees.
SmartETFs Smart Transportation & Technology ETF (MOTO - Free Report)
This fund provides exposure to companies involved in the manufacturing, development, distribution, and servicing of autonomous or electric vehicles. Its top five holdings are Amphenol (7.09%), Alphabet (5.99%), TSM (5.73%), Quanta Services (5.14%) and NVDA (4.97%).
MOTO gained 2% in 2024 and has soared 28.2% year to date. The fund charges 102 bps as fees.