AI investing has been a pillar of equities investing for years now, lifting up portfolios and pushing the U.S. economy forward. Artificial intelligence is already impacting sectors from agriculture to entertainment, with far-reaching implications both in and outside of investing. The big question for investors, then, is how best to harness that megatrend. A growing and diverse group of AI firms offers one intriguing answer — wearables.
AI & Wearables
It’s not just the big names like Meta (META) that are innovating in the space, though META is a key player therein. CEO Mark Zuckerberg emphasized during the firm’s recent earnings call that smart glasses, for example, may be a must in the future.
“I think in the future, if you don’t have glasses that have AI or some way to interact with AI, I think you’re … probably [going to] be at a pretty significant cognitive disadvantage compared to other people and who you’re working with, or competing against," he said.
META currently offers artificial intelligence glasses in partnership with Ray-Ban and Oakley. The glasses can record video, answer questions via voice commands, and interact with phones or headphones. Looking ahead, neural wrist sensors could even replace keyboards, mice, and touch screens. That transition would create a massive new set of opportunities for innovation and investment.
The megacap tech firm’s AI investing focus on wearables doesn’t just inform its own stock outlook, but also its suppliers and networked firms. For example, META has reached out to semiconductor firm MediaTek for help developing its own AI chip. Used for “AI inference,” the chip represents the value in the broader AI supply chain. For META, it reduces dependency on Nvidia (NVDA), for example, with the firm also exploring sensor bands to replace traditional interfaces.
AI Investing ETF Approach
The ROBO Global Artificial Intelligence ETF (THNQ ) charges a 68 basis point fee for its approach to firms like META and lesser-known AI plays. The strategy tracks the ROBO Global Artificial Intelligence Index, which is roughly 70% AI infrastructure and 30% applications and services firms. Furthermore, it identifies subcategories like big data and analytics, semiconductors, e-commerce, and more. Together, that helps the index provider create a score for each firm it considers. With a modified equal-weight approach, the index provides thoughtful diversification across the full scope of AI innovators.
THNQ has returned 16.3% YTD, beating both its ETF Database Category and FactSet Segment averages. Those metrics came in at 12.4% and 14.3%, respectively, per ETF Database on August 13. For those looking for a strong AI investing ETF option, THNQ could be one to watch.
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THNQ is the underlying index for the ROBO Global Artificial Intelligence ETF (THNQ) and the L&G Artificial Intelligence UCITS ETF (AIAI.LN).
VettaFi is the index provider for THNQ ETF and AIAI.LN, for which it receives an index licensing fee. However, THNQ ETF and AIAI.LN are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of THNQ ETF and AIAI.LN.
