They may be in the same category of exchange-traded funds, but not all artificial intelligence ETFs are the same.
There's no denying that artificial intelligence has produced some incredible investment opportunities. There's also no denying, however, that identifying the market's top AI stocks isn't easy. All of these tickers seem to quickly fall in and out of favor, often independently of one another. The rapid evolution of the artificial intelligence industry itself only complicates the challenge.
Fortunately, there's a solution. Rather than picking just one or two, buy a bunch of them and just ride the broad wave. The Global X Robotics & Artificial Intelligence ETF (BOTZ -1.58%) allows you to do exactly this with one simple trade.
The Global X Robotics & Artificial Intelligence ETF, up close
If you're not familiar with the term, "ETF" is short for exchange-traded fund. These are baskets of stocks with at least one common element. In this case, the common element is artificial intelligence -- all of the nearly 50 tickers found in the basket are somehow involved in AI.
When you buy a stake in the Global X Robotics & Artificial Intelligence ETF, you get all of these names in one fell swoop. You sell them the same way, simply exiting the exchange-traded fund just like you would a conventional stock.
But why this fund rather than similar options like the iShares Robotics and Artificial Intelligence Multisector ETF or the Invesco AI and Next Gen Software ETF? Those other ETFs certainly have their merits. There are subtle, but important, differences between them and the Global X Robotics & Artificial Intelligence ETF, though.
Chief among these differences is the diversification among its other holdings. The Global X fund is heavily exposed to foreign stocks that aren't otherwise available to U.S. investors. Some of these names are Japan's Yaskawa, Daif*cku, and Omron, which collectively offer a range of industrial automation (robotics) solutions.
This ETF is also modestly exposed to the biomechanical sliver of the healthcare sector, with stocks like Intuitive Surgical. Of course, it holds more familiar AI names like C3.ai and SoundHound AI as well.
All of these are part of the artificial intelligence market, though, which Precedence Research expects to grow at an annualized pace of 19% through 2032. This outlook jibes with expectations from Polaris Market Research as well as Technavio.
The kicker: The fund's annual expense ratio of 0.68% isn't rock-bottom, but it is low for an ETF of that ilk. These nickels and dimes add up over time.
Robotics are the next frontier of the AI movement
The Global X Robotics & Artificial Intelligence ETF obviously isn't the only way to plug into this growth, of course. But it may be the best one to invest $1,000 in right now for one important, nuanced reason: its exposure to the advanced robotics industry.
Artificial intelligence hardware like Nvidia's, along with AI software such as C3's or SoundHound's, may be the heart and soul of the artificial intelligence market. You're likely familiar with generative AI solutions such as Google's Gemini and Microsoft's Copilot. Most of these familiar stocks, however, are priced richly specifically because they've been in the spotlight for so long.
Not so for artificial intelligence-powered robotics, and for humanoid robotics in particular -- autonomous robots that are (more or less) shaped like humans, with two legs, two arms, and a head full of sensors. This young category of mechanical AI may play an underestimated part of the business on the foreseeable future simply because these robots can literally take the physical place of a human with no additional accommodations needed. That's why Global X analysts say there could be millions of humanoid robots in use by 2035.
If that sounds like way too many robots way too soon, consider this: Tesla has already made such a robot. Called Optimus, the most recent iteration of this technology is capable of handling warehouse and sorting work, as well as basic cooking duties.
Tesla CEO Elon Musk says its robots could be commercialized by the end of next year once the company figures out the best way of training them. If Musk's intended time frame is on target, it could lead to strong, steady growth. Precedence Research believes the AI robot market will grow at an average yearly pace of 21.5% through 2032.
It matters to investors simply because the Global X Robotics & Artificial Intelligence ETF is highly exposed to stocks that will specifically benefit from this growth.
The best option right now
Again, the Global X fund isn't necessarily the only way to invest in artificial intelligence. Other tremendous AI opportunities outside of robotics may surface in the meantime. Perhaps a handful of companies will emerge as clear long-term winners of this movement, reducing the risk of picking just one artificial intelligence name. Maybe these stocks' valuations won't be so stretched in the future, making many of them more compelling prospects. Anything's possible.
Waiting on something else or waiting for things to change can often do more harm than good, though. If you've got $1,000 available right now that you know you'd like to invest in AI, the Global X Robotics & Artificial Intelligence ETF isn't wildly overextended. Indeed, this ETF is one of the few that's still trading below its late-2021 peak, leaving plenty more room for straightaway upside. Don't overthink it.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical, Microsoft, Nvidia, and Tesla. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
