The WisdomTree Artificial Intelligence and Innovation Fund (WTAI) debuted last week, and with some market observers pointing to the possible emergence of a gilded age for artificial intelligence (AI) commencing next year, the rookie exchange traded fund could be in the right place at the right time.
The latest addition to the WisdomTree lineup, WTAI tracks the WisdomTree Artificial Intelligence & Innovation Index, which is a basket of AI- and innovation-intensive companies. Home to 75 stocks, WTAI focuses on the investable aspects of two foundational pieces in AI evolution: software and semiconductors.
That makes WTAI approachable for a broad swath of investors because AI ETFs are usually viewed through the thematic lens; software and chip stocks are usually cornerstones of traditional growth funds, many of which investors are already embracing. Software’s AI applications are expansive and include high-octane concepts such as generative design and natural language processing. Importantly, those concepts intersect with other innovative technologies.
“It is possible for today’s software applications to recognize and process text, creating a searchable database of all relevant research published on a particular topic. In drug discovery, all prior published clinical research could be processed quickly, and important notations flagged for a human researcher, mitigating the risk of wasted attempts going down paths already trodden,” according to WisdomTree research.
Regarding semiconductors, the applications in AI are numerous and include computation, data storage and transfer, and more. That’s relevant to WTAI investors because the new ETF is home to multiple chips equities including Qualcomm (NASDAQ:QCOM), Nvidia (NASDAQ:NVDA), and more.
“One must recognize that semiconductors are designed to serve a specific function, and the industry is moving toward more highly customized chips fit for individualized purposes—like how Apple started developing its own semiconductors for its products recently, bypassing the services of Intel,” adds WisdomTree.
Chip and software exposure are, of course, important in the WTAI conversation. So is the fund’s ability to set itself apart in a crowded field of older products. WTAI appears poised to deliver on that front.
“We created a more flexible and comprehensive approach to the AI investment process, focused on an appropriate mix of quantitative and qualitative research,” concludes WisdomTree. “By blending technical capabilities such as natural language processing and fundamental analysis with human intervention, the index construction process focuses on the specific functionality that each constituent is contributing to the development and deployment of AI, which provides precise access to this megatrend.”
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