This AI ETF Is on Fire & Can Still Deliver Long-Term Upside

There have been hiccups along the way, but the artificial intelligence (AI) rollout feels unrelenting this year. A bevy of ETFs reflect related ebullience, but responses across the landscape of AI-inclined ETFs aren’t linear. That means advisors and investors can be rewarded when doing some extra due diligence.

The Invesco AI and Next Gen Software ETF (IGPT) is an example of an unheralded but highly rewarding AI ETF. And don’t be deceived by “software” in the fund’s title. A 63.5% year-to-date gain confirms IGPT was largely resilient in the face of the “SaaS-pocalypse” that shook the tech sector earlier this year. The $1.2 billion IPGT turns 21 years old next week and follows the STOXX World AC NexGen Software Development Index.

“The Index is comprised of companies with significant exposure to technologies or products that contribute to future software development through direct revenue,” according to Invesco.

IGPT is home to 100 stocks with an average market capitalization of $1.8 trillion. That roster breadth, which exceeds that of some rival funds, ensures that the ETF touches a number of AI and tech bases.

Investigate IGPT for AI Upside

A 63.5% gain in less than half a year is indeed impressive. Of course, that rally may also give investors pause about getting involved today. Fortunately, there are valid reasons to believe that IGPT’s long-term trajectory will be a profitable one.

“What is clear is that presently the ‘picks and shovels’ of the AI industry, i.e. those firms involved in the AI infrastructure build out – large cloud computing services, data centres, server and computing capacity, as well as semiconductors and semiconductor equipment companies – are among the immediate potential winners,” noted BNP Paribas.

Another source of allure with IGPT is its leverage to the memory seminconductor trade. Micron Technology (MU) and South Korea’s SK Hynix are the ETF’s two largest holdings, combining for 24% of its weight. That’s meaningful to investors, because the memory chip shortage is expected to last into 2028.

That’s just one example of the longer-ranging vibrancy of the AI trade. Fortunately, IGPT has investors covered on the memory front and beyond.

“Considerable investment opportunities exist extensively in both AI design and infrastructure, and companies across an ever-growing number of sectors and industries that are starting to use AI to improve their own business models. We believe AI’s long-term investment potential remains a compelling proposition,” added BNP Paribas.

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