Following scintillating runs by AI-related stocks in 2023, some market observers believe a cooling-off period could be in the cards. However, that doesn’t dent the long-term thesis for AI investing.
If anything, that thesis is as compelling as it’s ever been and that’s good news for the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ). QQQ and QQQM have the same lineups. They are among the titans of AI exposure when it comes to ETFs that are not explicitly dedicated to AI.
It’s a good thing, too, because with assistance from marquee companies such as Alphabet (GOOG), Meta Platforms (META), Amazon.com (AMZN), Nvidia (NVDA), Microsoft (MSFT), and Tesla (TSLA) – all of which are QQQ and QQQM holdings – generative AI is expected to become a $100 billion industry by 2026, according to AltIndex.com.
Exponential Growth in the Cards
While generative AI is a new concept, it’s already established a track record of exponential growth. And it’s had profound implications for assets such as QQQ and QQQM.
“Between 2020 and 2023, the market size of generative AI has skyrocketed by a whopping 690%, jumping from $5.7 billion to $44.9 billion. In fact, statistics show the market has been practically doubling for the past three years. With the annual growth rates floating between 93% and 106%,” noted AltIndex.
Regarding the generative AI investment thesis, geography matters. The U.S. is expected to remain a leader on this front, followed by China and, to a lesser extent, Europe. Fortunately, the aforementioned QQQ/QQQM holdings are U.S.-based companies. Some of these companies have significant export exposure to the Asia-Pacific region.
“In global comparison, the United States will remain the world’s largest generative AI market, expected to hit $37.3 billion in value in 2026, or 60% more than this year. As the second largest globally, the Chinese market will grow even more. With its valuation jumping by 72% to $14.7 billion in the next two years. The German generative AI market follows with a 60% two-year increase and a valuation of $4.5 billion by 2026,” according to AltIndex.
Another thing that’s pertinent to investors mulling QQQ and QQQM is the rising demand for AI tools and components. That could create new, lucrative revenue streams for the many semiconductor and tech gear companies residing in QQQ and QQQM.
For more news, information, and analysis, visit the ETF Education Channel.
