It might feel as though enthusiasm surrounding artificial intelligence (AI) and the related investment theme has waned in recent months.
Actually, the opposite is true. With large- and mega-cap technology stocks rebounding as of late, artificial intelligence could be back in focus, potentially sparking elevated attention for ETFs such as the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ) in the process.
Helped in part by AI ebullience, QQQ and QQQM, both of which track the NDX, are higher by 45.5% year-to-date. That’s well ahead of the 18.9% returned by the S&P 500. Moreover, there’s recent momentum for the Invesco ETFs as they’re higher by 6.1% over the past 20 days, an advantage of 160 basis points over the S&P 500.
AI Buzz Is Growing
As homes to well-known, AI-related mega-cap tech and communication services equities, QQQ and QQQM have become non-dedicated AI bellwethers. This is true at least for some advisors and investors. Accordingly, that’s proven advantageous, and 2024 could lead to more of the same.
“The buzz about AI is getting louder, with tech shares maintaining their outperformance and major players getting ready to roll out new AI tools,” noted BlackRock. “We see AI as one of five mega forces, or structural shifts that can drive returns now and in the future. We are overweight the AI theme in developed market (DM) stocks. We see the implications of AI going beyond pure technology companies, transcending sectors and geographies.”
Multiple points underscore the utility of QQQ and QQQM as AI plays. First, the ETFs remove the stock-picking burden. Second, of particular importance to long-term investors, is the fact that AI evolution is still in its infancy.
“Advances in computing hardware and deep learning innovations led to an inflection point for AI in late 2022. We think we are at the dawn of an intelligence revolution – with exponential advances,” added BlackRock.
The technology to mantain AI today and required to push it forward is complementary. This is another point for QQQ and QQQM as AI investments. This means multiple technologies support AI advancements and tools. That’s relevant to investors considering the Invesco ETFs because the funds feature exposure to an array of tech industries.
“We observe a fundamental shift in the tech industry towards AI-centric business models, igniting a competitive race among a handful of mega cap companies. We view this evolution in terms of a technology ‘stack,’ with increasingly foundational technologies appearing closer to the bottom,” concluded BlackRock.
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