AI is fast changing the business landscape by expanding opportunities, driving revenues and enhancing efficiencies. It helps enhance almost everything, including advertising, healthcare, robotics, retail, video streaming, gaming and urban development.
We are living in an era largely dominated by AI applications and technological advancements. Amid the coronavirus crisis, demand for online services has increased which in turn has led to the dominance of the AI. Globally, the AI market is estimated to see a CAGR of 29%, rising from a worth of $42.8 billion in 2019 to $152.9 billion in 2023, according to an Analytics Insight article.
Let’s look at how AI is bringing revolutionary changes in some of the sectors:
Consumers currently opt for online purchases of food items and other goods and are resorting to video streaming services and other modes of in-house entertainment. In line with the rising online shopping trend, customers are resorting to digital payments to clear their bills, while merchants and utility providers are advocating the same. Even as the global economy starts to reopen in phases and social-distancing restrictions are being eased, people are trying to minimize human-to-human contact. In fact, the AI market in the retail segment is expected to grow by $14.05 billion (including the pandemic impact) during 2019-2023, per an Analytics Insight article.
AI-enabled chips are seeing growing demand as they allow applications that need AI for object detection, computer vision, natural language processing and facial recognition to function in a time-efficient manner, per an Analytics Insight article. In fact, AI-enabled chips are expected to rake in revenues of $91,185 million in 2025, in comparison with $6,638 million in 2018, per the same article. Thus, several companies are investing significantly to gain from this market momentum. Going by the Analytics Insight article, NVIDIA (NVDA), Qualcomm (NASDAQ:QCOM) and Advanced Micro Devices (NASDAQ:AMD) are developing AI-enabled chips that will strengthen the performance of AI applications. In this regard, Qualcomm has introduced AI-enabled Snapdragon 732G to enhance High-Tier Mobile Gaming.
Telemedicine and Digital Health are receiving significant importance through the pandemic. With a large amount of the global population under stay-at-home orders, technology-based tools that enable remote communication with doctors and allow patient monitoring have become popular. Last week, Amazon.com, Inc. (NASDAQ:AMZN) introduced Amazon Halo, a health and wellness band combined with a suite of AI-powered health features that can be accessed via the Halo app on Android or iOS.
According to a MarketsandMarkets report, the global AI healthcare market is expected to reach a worth of around $45.2 billion by 2026 from $4.9 billion in 2020, at a CAGR of 44.9%. Growing volume of healthcare data and increasing complexities of datasets, need to decrease rising healthcare costs, enhancing computing power and decreasing hardware costs, increasing number of cross-industry partnerships and alliances, and growing imbalance between health workforce and patients are leading the upside in the market, per the report.
ETFs to Shine
Per ETFdb.com, AI ETFs basically follow any of the three criterions:
First, the funds may particularly pick companies developing products or services, involved in technological enhancements in scientific research related to AI. Second, funds with a minimum of 25% portfolio exposure to companies spending heavily on AI. Finally, funds using AI techniques to pick individual stocks for portfolios like The Qraft AI Enhanced U.S. Large-Cap ETF (QRFT) and The Qraft AI Enhanced U.S. Large Cap Momentum ETF (AMOM).
Below we discuss a few:
Global X Robotics & Artificial Intelligence ETF BOTZ — up 23.6% year to date
The fund tracks the investment results that correspond generally to the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index. Notably, the fund provides exposure to the performance of companies which benefit from increased adoption of AI, robotics and automation. The fund has 31 holdings with an AUM of $1.74 billion. It charges 68 bps in fees (read: ETFs to Watch Post Stellar Q2 Earnings From Nvidia (NASDAQ:NVDA)).
iShares Robotics and Artificial Intelligence Multisector ETF IRBO — up 21%
The fund tracks investment results that correspond generally to the performance of the NYSE FactSet Global Robotics and Artificial Intelligence Index. Notably, the fund provides exposure to companies that could benefit from the long-term growth and advancement in robotics and AI. The fund has 101 holdings, with an AUM of $180.1 million. The fund charges 47 bps in fees (read: ETF Areas to Join the Thematic Investing Trend in 2H20).
First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT — up 14.3%
The fund tracks the investment results that correspond generally to the performance of the Nasdaq CTA Artificial Intelligence and Robotics Index. Notably, the fund provides exposure to companies involved in AI, robotics and automation. The fund has 102 holdings, with an AUM of $119.2 million. It charges 65 bps in fees (read: Beat the Fed Minutes Blues With These ETF Areas).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report