With all the talk about companies enabling and adopting artificial intelligence, often lost in the conversation are foundational pieces of the puzzle. Those include data. Put simply, there’s no understating the importance of data collection and storage as bedrocks in advancing AI.
Those are investable themes accessible via exchange traded funds such as the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ). That might surprise some investors. Many view funds such as QQQ and QQQM through the lens of AI adoption and enablement. While that’s an accurate outlook, it doesn’t take into account data’s role pushing AI forward.
With regards to AI, data comes in two primary forms: structured or unstructured. As its name implies, structured data comes with a higher level of organization. That’s not an indictment of unstructured data, which is a backbone of generative AI.
“While structured data is easier to decipher, unstructured data provides a deeper understanding into habits and behavior when analyzed effectively, thereby delivering more meaningful results, and driving enhanced outcomes,” according to Goldman Sachs Asset Management (GSAM).
Digging Into AI Data
Many consider the companies residing in QQQ and QQQM AI adopters or enablers. Amazon (AMZN) and Tesla (TSLA) are good examples of adopters while Nvidia (NVDA) and other semiconductor companies are enablers.
That doesn’t diminish the case for the Invesco ETFs as AI data plays. Take the case of cloud computing and hybrid technologies, both of which are integral when it comes to AI data.
“Cloud environments provide scalability, accessibility, and generally operate under a usage-based cost structure. However, the dependency on external service providers could create data privacy concerns,” added GSAM. “In recent years, there has been a large shift toward cloud environments. In addition to being catalyzed by the pandemic, increased momentum in AI workloads and AI-related services is set to contribute to cloud computing growth and margins going forward.”
Point is there are plenty of companies with robust cloud computing exposure held by QQQ and QQQM. Data already confirm that the percentage of workloads residing in the cloud is soaring. Many expect that trend to continue in the coming years thanks to AI.
Another element of the AI data equation that’s highly relevant to investors considering QQQ and QQQM is cybersecurity – a theme to which many of the ETFs’ member firms have exposure.
“The rise in volume and sophistication of cyberattacks is being driven by increased digitization globally and the complex geopolitical environment. AI’s advancing capabilities may also be used to develop cyberattacks and enable data breaches, but they will also be a critical component of successful defense, potentially identifying hidden activity and complex patterns of malicious behavior,” added GSAM.
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