The ALPS O’Shares Global Internet Giants ETF (OGIG) is capturing a shift in artificial intelligence investing from hardware spending to revenue generation as companies monetize AI through advertising platforms and data licensing, according to the fund’s quarterly insights report.

The internet giants ETF has returned 29.1% over three years, outpacing its category average of 24.2%. Alpha came from companies outside the Magnificent Seven that are using AI to optimize ad targeting and user engagement, according to SS&C ALPS.

AppLovin Corp. (APP), which represents 2.4% of OGIG, surged 105.25% in the third quarter. That growth came after it expanded its AI advertising engine Axon beyond gaming into e-commerce and other business verticals, according to the quarterly report. The company joined the S&P 500 Index in September.

AppLovin’s Axon engine uses artificial intelligence to help app developers and marketers acquire users and optimize ad revenue, according to SS&C ALPS. The company expanded Axon into non-gaming markets through its Axon Ads Manager tool. That led to a wave of price target upgrades from Wall Street analysts.

Beyond the Magnificent Seven

Reddit Inc. (RDDT), holding 1.7% of the fund, climbed 52.75% in Q3. That revenue growth came from advertising and data licensing deals that monetize its 20-year archive for AI training, according to the quarterly insights report. The social networking platform rallied to all-time highs after reporting quarterly earnings that beat analyst expectations.

The fund has gained 15.6% year-to-date and returned 14.3% over the past year, according to ETF Database. OGIG held $141.8 million in assets under management with an expense ratio of 0.48%.

Meta Platforms Inc. (META) represents the fund’s largest holding at 6.2%, followed by Microsoft Corp. (MSFT) at 6.1% and Alphabet Inc. (GOOGL) at nearly 6%, according to ETF Database.

Communication services provided OGIG’s best sector performance in the third quarter. That sector contributed 3.8% to returns, according to the quarterly report. Information technology added 2.2%, while consumer discretionary contributed 1.2%.

OGIG tracks the O’Shares Global Internet Giants Index, which screens companies for gross margin and cash flow sustainability.

VettaFi LLC (“VettaFi”) is the index provider for OGIG, for which it receives an index licensing fee. However, OGIG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OGIG.

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