3 Must-Have AI ETFs to Buy in 2025
The AI sector is booming, but many individual AI stocks are trading at high valuations, posing significant downside risks. For example, companies like Palantir (PLTR) and Nvidia (NVDA) have experienced sharp declines. Buying AI ETFs alongside individual stocks can help minimize volatility while still gaining exposure to the AI industry’s growth.
- AI ETFs spread risk across various companies and sectors.
- A “black swan event” could impact individual stocks, but AI ETFs provide diversified protection.
Here are three top AI ETFs that offer excellent growth potential while reducing risk.
1. Global X Artificial Intelligence & Technology ETF (AIQ)
The Global X Artificial Intelligence & Technology ETF (AIQ) has seen an impressive 118.7% return over the past five years, surpassing the S&P 500’s 83.3% gain. Launched in 2018, it currently manages $3.3 billion in assets, with an expense ratio of 0.68%, reflecting its premium AI focus.
- Investment Strategy: Focuses on companies involved in AI technology development or its significant use.
- Top Holdings: Includes Tesla (4.41%), Netflix (4.1%), Meta Platforms (3.79%), and IBM (3.73%).
- Diversification: Holds 85 companies, with its top 10 holdings accounting for 37.24% of total assets.
AIQ provides robust exposure to AI-driven companies, particularly in tech and media.
2. ROBO Global Artificial Intelligence ETF (THNQ)
The ROBO Global Artificial Intelligence ETF (THNQ) has seen a 111% gain since May 2020. It focuses on companies deriving a significant portion of their revenue from AI, with 72.48% of its assets in the tech sector. With 59 holdings, THNQ targets a more tech-heavy approach.
- Investment Strategy: Targets companies with substantial AI revenue and growth potential.
- Top Holdings: Includes Raspberry Pi (2.86%), Cloudflare (2.67%), and Amazon (2.18%).
- Rebalancing: Quarterly adjustments to holdings for optimal performance.
With a 0.68% expense ratio, THNQ offers a strong tech-centric portfolio, especially for those interested in AI startups.
3. iShares Expanded Tech Sector ETF (IGM)
The iShares Expanded Tech Sector ETF (IGM) tracks the S&P North American Expanded Technology Sector Index, delivering nearly 139% growth over the last five years. Although it’s not purely focused on AI, many of its top holdings are AI leaders, making it a solid option for those looking for exposure to big-cap tech stocks.
- Investment Strategy: Focuses on the tech sector with heavy exposure to AI frontrunners.
- Top Holdings: Includes Meta (9.27%), Apple (8.07%), Microsoft (7.83%), and Nvidia (7.41%).
- Expense Ratio: The lowest among these options at just 0.41%.
Though there’s some risk due to high valuations, IGM remains one of the highest-performing ETFs in recent years due to its exposure to mega-cap tech companies.
AI ETFs offer a great way to invest in the artificial intelligence sector without the volatility of individual stocks. Global X AIQ and ROBO THNQ provide deep exposure to AI-driven companies, while iShares IGM focuses more on established tech giants. With diversification and the potential for high returns, these ETFs are must-haves for 2025.