The ROBO Global THNQ Artificial Intelligence index concluded 2024 with a 5.75% return in Q4, outperforming the Vettafi Full World Index’s -0.95% quarterly return. The index posted a 19.4% annual gain, modest compared to 2023’s 57% surge.
AI’s benefits are becoming increasingly tangible at both individual and societal levels, delivering enhanced value with reduced resources. Concerns about AI’s energy consumption overlook both hardware advances and model efficiency improvements. They also overlook the substantial energy savings AI enables in sectors like residential power consumption and transportation. The horizon promises universally accessible AI assistants, precisely attuned to individual and organizational needs, goals, and constraints. Recent test results demonstrate AI’s growing prowess in specialized fields like law and medicine, frequently surpassing human performance benchmarks.
Valuations saw only moderate increase in 2024, with the portfolio’s weighted average forward EV/sales rising from ~7.9 times to 8.33 times — notably below 2021’s peak of 14 times and current index leader NVIDIA’s 25.8 times.
Performance was primarily driven by improved guidance and earnings execution. Looking ahead to 2025, we expect NVIDIA’s relative outperformance to moderate, given elevated expectations. Meanwhile other constituents have significant upside potential against more conservative valuations.
The metrics are compelling. 95% of constituents are profitable, 85% report positive year-over-year Q3 2024 EPS growth of 28.9%, and 91% show year-over-year Q3 2024 sales growth of 18.7% (FactSet, weighted average).
Subsector Performance
Eight of 10 subsectors delivered positive Q4 2024 performance. Healthcare and factory automation were the only laggards — though healthcare showed strong momentum in Q3. The network & security subsector, led by Snowflake (up 44.8%), Crowdstrike (up 22.0%), and Pure Storage (up 22.3%), continues to strengthen as a crucial foundation for AI infrastructure. Big data & analytics saw strong performances from Datadog and Elastic, despite some weakness in MongoDB, positioning well for accelerated AI deployment in 2025.
Real-world implementations are accelerating, exemplified by Alphabet’s Waymo division expanding autonomous vehicle operations to LA and Austin, with Miami and Japan on the horizon. Multi-modal AI has arrived, integrating text, vision, and audio processing with enhanced physical world understanding. This will push consumer-grade AI to become more mainstream, something we anticipate from META’s innovations in augmented reality and human-computer interaction (e.g. wrist motor sensors).
In the semiconductor sector, Ambarella led with a 29% stock gain, outpacing NVIDIA’s 10.6%, highlighting the growing importance of edge computing and embodied AI for real-world applications. Notable developments included AI chip announcements from Amazon (Trainium) and Microsoft (MAIA), plus TSMC’s launch of advanced nodes at Arizona’s fab 21 plant. The latter’s progress on silicon photonics for networking points to future energy and performance gains. Looking ahead, this expansion will drive demand for more scalable networks, enhanced cybersecurity, and edge solutions like the recently added Raspberry Pi, while locally-running AI models on consumer hardware become mainstream.
Expectations for 2025
Looking ahead, 2025 stands as a pivotal inflection point in technological advancement. Superhuman AI capabilities are already emerging in specific domains, and being rapidly refined into practical, reliable tools and autonomous systems. Expect continued transformation across industries, with global connectivity reaching new heights and AI developing deep contextual understanding of human knowledge. Current valuations suggest significant upside potential as these technological advances translate into tangible business outcomes and societal benefits.
VettaFi LLC (“VettaFi”) is the index provider for THNQ, for which it receives an index licensing fee. However, THNQ is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of THNQ.
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