With this special investment, the work gets done automatically.
When you think of investing in artificial intelligence (AI), you might immediately think of certain names that are always in the headlines. I’m talking about the leading AI chip design companies. NVIDIA (NVDA 1.75%)The company’s market dominance has helped its revenue soar into triple digits in recent quarters and sent its stock price up more than 200% over the past year.
This is great, and Nvidia has the power to continue to grow. But the ultimate long-term AI investment may not be in one stock, but in multiple stocks. This might sound daunting, as you need to identify companies now that are likely to be future AI winners. But the good news is that you don’t have to do all of this heavy lifting yourself.
The next investment is all done for you, meaning you don’t have to lift a finger. Over time, you’ll be well positioned to benefit from the AI ​​boom. Let’s take a closer look at this AI investment you can’t miss.
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Invest in many potential winners
So how do you invest in stocks that are likely to be winners in the stock market without having to pick them yourself? You turn to exchange-traded funds (ETFs) that follow a particular theme and trade on the market every day like individual stocks. In this case, you look for AI themes. WisdomTree Artificial Intelligence Innovation Foundation (WTAI -0.05%).
The fund tracks the performance of the WisdomTree Artificial Intelligence and Innovation Index. The index and the fund include some of today’s major AI players. You probably won’t be surprised to hear that the fund’s top position is Nvidia, with a weighting of over 3%. But by investing here, you’re also betting on a number of other winners and potential winners. Other top holdings include: Arm Holdings, Qualcommand Meta PlatformUnsurprisingly, the information technology industry makes up over 79% of the fund.
That said, the fund recognizes that potential AI winners exist across a wide range of industries, and includes a broad range of stocks, from healthcare to industrials to consumer discretionary. By investing in the WisdomTree fund, you can benefit from a variety of AI success stories, from standout chipmakers to pharmaceutical companies developing potentially life-saving medicines.
Pros and Cons
Of course, there are pros and cons to everything, but here are two cons. First, it’s important to remember that with any ETF, you need to consider the fees associated with managing the fund. If these expenses are too high, they can eat into your returns in the long run, so it’s important to choose an ETF with an expense ratio of less than 1%. The WisdomTree fund has an expense ratio of 0.45%, meeting this criteria.
The second point is that investing in an ETF is unlikely to produce the same level of return as investing in one or two AI stocks over a few years. For example, the WisdomTree fund holds Nvidia shares, but because of the weightings of other stocks, the ETF won’t soar along with the chip design company. On the other hand, if one of the ETF’s holdings falls, this works to your advantage: the gains in the other stocks limit your losses.
Now, moving on to the big “upside” of investing in the WisdomTree ETF, which, as mentioned above, is the idea of ​​gaining access to a lot of potential AI winners. In the short term, this may not translate into big gains for the fund, but over time, as the AI ​​growth story gains momentum, many of these AI companies could outperform. As a result, the ETF’s performance may follow suit.
Sure, Nvidia and other companies experiencing AI success today are great investments. But over the long term, having the tools to invest in many of these companies can help you maximize your potential gains while simultaneously reducing your risk. That’s why the WisdomTree Artificial Intelligence Innovation Fund is the ultimate AI growth investment today.
Randi Zuckerberg is a former director of market development and public relations for Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Meta Platforms, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.
