Artificial intelligence remains in high demand, at least according to third-quarter earnings results. Palantir Technologies revealed a record quarter income on “unwavering demand” for AI, while also lifting revenue forecasts, reported Financial Times. Such performance underscores the potential of AI companies beyond the Magnificent Seven, captured in funds like the KraneShares Artificial Intelligence & Technology ETF (AGIX ).
Palantir Technologies reported a revenue gain of 30% in third-quarter earnings, while U.S. commercial revenues grew 54%. The Denver-based AI company also raised its revenue guidance for the year to $2.81 billion. The company’s stock is up over 225% YTD on a price returns basis, according to Y-charts data.
he growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand [for AI tools],” Alex Karp, CEO of Palantir Technologies, explained in a note to shareholders alongside its earnings report.
AGIX offers high-conviction, concentrated exposure to AI companies. The fund tracks the Solactive Etna Artificial General Intelligence Index that holds both public and private AI companies. Palantir Technologies is a current holding of the fund, carried at a 2.1% weight as of Nov. 6.
The strategy harnesses broad opportunity when looking across the AI ecosystem beyond the Magnificent Seven. This includes semiconductors, data centers, cloud companies, edge AI, large language models, and AI applications.
“We believe there are opportunities beyond Mag Seven,” explained Derek Yan, senior investment strategist at KraneShares in a video. “Investors should consider the three layers of the AI ecosystem.”
AGIX invests in three fundamental pillars of the AI ecosystem: infrastructure, hardware, and applications. The index begins with a starting universe of approximately 3,000 companies and filters for characteristics such as liquidity and market cap. It then screens for companies that fall within 12 AI-related industries.
Each security then receives an AI exposure score, a proprietary formula that considers “AI readiness” as well as “AI relevance.” The highest-scoring companies make it into the Index, and are further weighted by their AI exposure score as well as by market cap.
“Only a small percentage of companies meet our standards for AI readiness and relevance,” Yan noted. “AGIX targets to capture the current AI leaders and the potential AI winners.”
No single pillar makes up more than 40% of the total weight of the underlying index. The strategy is a high-conviction one, with between 40-50 securities at any given time. It also rebalances on a quarterly basis to keep current with AI trends.
AGIX carries an expense ratio of 1.00%.
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