On this week’s episode of ETF Prime, Zeno Mercer, senior research analyst at VettaFi, joins host Nate Geraci to unpack the expanding role of AI in the global economy, its growing share of GDP, and why he believes we’re still in the early innings of AI ETF adoption. Later in the podcast, Will Rhind, founder and CEO of GraniteShares, shares his insights into its YieldBOOST lineup of ETFs and offers perspective on the growing demand for options-based ETF strategies overall.
Geraci and Mercer begin by discussing how AI continues to reshape the economy, with Mercer emphasizing the increasing investment in both infrastructure and operational AI expenditures. “AI’s economic impact is only getting started,” he noted, pointing to the sector’s rising contribution to GDP as companies double down on AI capabilities.
AI ETFs & the Capex Cycle
Mercer reflects on the growth of AI-themed ETFs, and attributes this momentum to strong investor interest. Mercer also attributes it to companies that are strategically positioned in the current capex cycle, particularly those supplying hyperscalers and infrastructure.
Despite the sector’s impressive run, Mercer believes AI ETF adoption remains in its infancy. “There’s still a significant runway ahead,” he said, citing the relatively low exposure most investors currently have to dedicated AI strategies.
Beyond the ‘Mag Seven’
While mega-cap tech names have dominated headlines, Mercer stresses the importance of looking beyond the “Mag Seven.” He points to smaller, more technically advanced firms that may offer faster growth from a lower base. “Some of the most exciting opportunities are coming from companies most investors haven’t even heard of yet,” he explained.
Mercer highlighted the active research overlay of the ROBO Global Artificial Intelligence Index (THNQ) and recent lesser-known additions like Nebius (NBIS) supporting performance. He also emphasized THNQ’s diversification, noting the top ten constituents make up 25% of the index by weighting.
The Rise of Edge AI
Mercer also expressed excitement around the convergence of physics and AI, especially the growing performance per watt in AI chips. He highlighted the shift toward smaller, more efficient models capable of running on edge devices such as smartphones, robots, and drones.
“This is where the next big wave is coming — edge AI Mercer said. “It’s about bringing AI closer to the data source, enabling real-time processing and unlocking entirely new applications outside of the data center.”
Looking ahead, Mercer believes the real-world impact of AI will become increasingly tangible, driven by advancements in edge computing and broader adoption across industries.
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THNQ is the underlying index for the ROBO Global Artificial Intelligence ETF (THNQ) and the L&G Artificial Intelligence UCITS ETF (AIAI.LN).
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for THNQ ETF and AIAI.LN, for which it receives an index licensing fee. However, THNQ ETF and AIAI.LN are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of THNQ ETF and AIAI.LN.
