Analyst Tom Lee believes the pullback in artificial intelligence stocks could give investors another chance to buy into a major source of corporate earnings growth. While concerns about valuations, debt and AI infrastructure spending have rattled investors, Lee remains bullish on semiconductor stocks, software companies and the Magnificent Seven.
In fact, Lee argued that the AI selloff could be approaching its end. While acknowledging concerns about debt financing, he said the industry’s underlying fundamentals remained healthy. His position is straightforward: “the unwinding of crowded positions could create an attractive entry point in some of the market’s biggest growth drivers,” as reported by TradingView.com.
Lee believes the resulting pullback could also create “opportunities” in stocks that have come under pressure, particularly AI stocks. “I think as much as people are sort of fearful of this, I’d be sort of jumping into the AI, semiconductor, Mag Seven, software. These are AI downstream names,” they added.
While you can always buy AI stocks, such as Nvidia and Advanced Micro Devices, you can better diversify with exchange traded funds (ETFs) at a lower cost.
For example, if you were to buy 100 shares of NVDA, it would cost you about $21,400. But if you were to buy 100 shares of an AI ETF such as the Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ), it would cost around $6,250.
Let’s start by looking at the exposure offered by that ETF.
The Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ) offers investors a way to spread their money across companies involved in the AI industry. Its annual expense ratio remains 0.68%, or $68 for every $10,000 invested. The fund held 88 positions, with holdings including Palantir, Microsoft, Meta Platforms, Amazon, Alphabet and Oracle.
AIQ invests across several parts of the AI market, including companies developing software and services and businesses supplying the chips and hardware needed to process data.
Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ)
The Global X Robotics & Artificial Intelligence ETF focuses on companies involved in robotics, automation and AI. Its annual expense ratio remains 0.68%, or about $68 per $10,000 invested. Global X has 81 holdings, including Intuitive Surgical, Keyence, Fanuc, Nvidia, ABB and SMC.
BOTZ offers a different angle on the AI story by emphasizing technologies that help machines perform tasks. Its investment mandate includes industrial automation, non-industrial robots and autonomous vehicles. That makes it a way to participate in the adoption of robotics across businesses, alongside exposure to AI computing. The fund follows an index and invests globally.
Roundhill Generative AI & Technology ETF (NYSEARCA: CHAT)
The Roundhill Generative AI & Technology ETF targets companies developing generative AI and related technologies. Its annual expense ratio is 0.75% or about $75 for every $10,000 invested.
According to Roundhill’s fact sheet, CHAT held 43 positions. Its largest holdings included Nvidia, Alphabet, SK Hynix, Microsoft and ASML, followed by companies such as Advanced Micro Devices, Amazon, Astera Labs, Micron Technology and Nebius Group.
Its portfolio provides exposure to both AI platforms and the infrastructure supporting them. That matters because greater adoption could create opportunities across several types of businesses. Still, CHAT remains heavily exposed to technology stocks, which represented approximately 78% of the portfolio at September’s end. Investors should expect sensitivity to shifts in AI spending, competition and market expectations.
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