Much has been made about the practicality of artificial intelligence spending. This is understandable, because some of the numbers floating around are astronomical.
Those expenditures are relevant to investors evaluating ETFs like the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ). That’s because those funds are homes to AI enablers and hyperscalers. Regarding AI spending, Mark Zuckerberg, CEO of Meta Platforms (META) — a QQQ/QQQM holding — recently said it’s possible his company could spend on AI in massive fashion and not hit all of its AI objectives.
There’s already evidence AI spending misses have occurred in Corporate America. But that’s not necessarily a strike against QQQ, QQQM, or the ETFs’ AI-adjacent holdings. In fact, generative AI is already viewed as transformative and a technology many corporations are willing to embrace over the long term. Indeed, there are likely to be bumps in the road. But corporate usage of generative AI is just getting started. That may imply there’s room for QQQ/QQQM holdings to generate more upside in the years ahead.
ArtificiaI Intelligence on Companies’ Radars
One of the initial steps on the road to AI spending that can potentially generate positive outcomes for QQQ/QQQM member firms is end-users acknowledging the technology can benefit their organizations. That evolution is taking shape.
“Nearly half of S&P 500 companies are mentioning artificial intelligence (AI) in their earnings calls – more than double from a year earlier — reflecting a broader focus on business adoption underway. Compared to recent technological excitements like cryptocurrencies and driverless cars, AI may deserve the enthusiasm,” noted Stephanie Aliaga, global market strategist at J.P. Morgan Asset Management.
There are valid reasons for companies to become customers of the AI enablers and purveyors residing in the Invesco ETFs. Notably, generative AI can be a productivity enhancer. And when productivity increases, profits can follow suit.
“We estimate a potential boost of 1.4%-2.7% per year over a decade for developed markets, close to others’ estimates,” added Aliaga. “Such gains could meaningfully increase real output while lowering the costs of many goods and services.”
Increased productivity and profitability speak to the accessibility and versatility of generative AI mentioned by Aliaga. These factors could pave the way for healthy growth in developed economies. Importantly, that doesn’t mean QQQ/QQQM AI names will be jobs killers. Rather, those companies could play prominent parts in creating newer, higher-level roles in which humans work in tandem with AI.
“Future jobs will increasingly involve working alongside AI and focusing on humans’ relative strengths, such as conceptual reasoning, emotional intelligence and creativity,” concluded Aliaga.
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