Artificial intelligence (AI) is a future technology. Get informed about how to invest in AI, and what you should consider when investing, with this guide.
Artificial intelligence has become an unavoidable topic for most people, including investors. This moneyland.ch guide explains what you should know about investing in AI-sector stocks.
What is artifical intelligence?
The term artificial intelligence describes technologies that replicate human intelligence and are able to solve problems. Artificial intelligence can be roughly divided into two main categories: Soft AI and Hard AI. At this point in time, hard AI does not yet exist (Date: September 2024).
Soft AI has been present in everyday life for a long time now – in the form of voice recognition, language translators, and digital assistants like Siri (Apple) and Alexa (Amazon), for example. The Chat GPT chatbot also falls into the Soft AI category, although it is far more advanced than some other AI applications.
What makes artificial intelligence appealing to investors?
The topic of artificial intelligence is unavoidable for anyone who regularly follows the news. That is hardly a surprise: AI is all the rage, largely because of its strong potential for growth. Many experts talk about a new industrial revolution and see in AI the spitting image of a future industry sector. Investors are trying to participate in this development. According to a study by accounting firm PWC, artificial intelligence will boost the global gross domestic product (GDP) by 14 percent between now and 2030.
The massive potential growth of the AI sector encouraged huge gains in the stock price of US electronics company Nvidia in early 2024, for example. For a time, Nvidia was the most valuable company in the world, in terms of market capitalization. The company is expected to play a key role in AI development. Nvidia designs high-performance graphics processing units, which form the basis of artificial intelligence.
Which companies are at the forefront of artificial intelligence?
In addition to Nvidia, US company Open AI has received a lot of publicity. Its best-known product, Chat GPT, has been the topic of much discussion. Because Open AI is a foundation, buying shares in the company’s stock is not possible – at least not directly. But you can participate in the company’s development indirectly by buying shares in tech giant Microsoft, which is Open AI’s biggest investor.
Many companies in the technology sector are also at the forefront of AI. In addition to Microsoft, companies like Alphabet (Google), IBM, and Amazon also play a central role.
Are there any indexes that track AI stocks?
There are a number of stock indexes that focus specifically on the burgeoning AI sector. One thing that stands out when you look at these indexes is the predominance of US stocks. That provides an indication of just how heavily the AI sector is dominated by the US. Only the Indxx Global Robotics & Artificial Intelligence Thematic Index has a US component of less than 50 percent (Date: September 2024).
The MSCI ACWI IMI Robotics & AI Index is a sub-index of the global index MSCI ACWI IMI that includes only stocks in the AI and robotics sector, with stocks from 31 countries represented in the index. The same applies to the MSCI ACWI IMI Robotics & AI ESG Filtered Index, with the difference that this index also follows ESG criteria.
US stock exchange operator NASDAQ also offers several AI indexes. While the Nasdaq CTA Artificial Intelligence Index focuses on US companies, the Nasdaq Global Artificial Intelligence and Big Data Index also includes companies from other countries. However, in the latter index too, the US makes up a disproportionately large part of the index.
The table below provides an overview of AI stock indexes.
Table 1: Selection of stock indexes that track the AI sector, sorted alphabetically
| Index | Number of stocks |
Most heavily- weighted stock |
Number of countries |
Most heavily- weighted country |
|---|---|---|---|---|
| Indxx Global Robotics & Artificial Intelligence Thematic Index |
42 | Nvidia (8.52%) | 10 | USA (48.09%) |
| iStocks AI Global Artificial Intelligence 100 |
100 | Cogent Communications (2.43%) | 10 | USA (55.7%) |
| Morningstar Global Artificial Intelligence Select Index |
48 | Broadcom (6.03%) | 5 | USA (86.82%) |
| MSCI ACWI IMI Robotics & AI ESG Filtered Index |
165 | Nvidia (4.14%) | 31 | USA (86.46%) |
| MSCI ACWI IMI Robotics & AI Index |
595 | Nvidia (6.03%) | 31 | USA (81.09%) |
| Nasdaq CTA Artificial Intelligence Index |
71 | Nvidia (3.50%) | 1 | USA (100%) |
| Nasdaq Global Artificial Intelligence and Big Data Index |
86 | Nvidia (9.46%) | 8 | USA (80.54%)* |
| Robo Global Artificial Intelligence Index |
57 | Samsara (2.57%) | 10 | USA (80.6%) |
Source: Index publishers. Date: September 2, 2024.
Which ETFs can I use to invest in AI stocks?
There are a number of exchange-traded funds (ETFs) that aim to replicate the AI stock indexes listed in Table 1. There is also an actively managed ETF, the ARK Artificial Intelligence & Robotics UCITS ETF USD Accumulating fund, which uses a portfolio put together by the fund managers instead of replicating an index. Its fees – the total expense ratio (TER) – are higher than those of the index ETFs.
Table 2: Selection of ETFs that invest in AI stocks, sorted by TER
| ETF | ISIN | Domicile of fund |
TER | Dividends | Replication |
|---|---|---|---|---|---|
| Indxx Global Robotics & Artificial Intelligence Thematic Index | |||||
| Global X Robotics & Artificial Intelligence UCITS ETF USD Accumulating |
IE00BLCHJB90 | Ireland | 0.50% | Accumulating | Physical |
| Global X Robotics & Artificial Intelligence UCITS ETF USD Distributing |
IE00BLCHJC08 | Ireland | 0.50% | Distributing | Physical |
| Morningstar Global Artificial Intelligence Select Index | |||||
| iShares Future AI & Tech ETF | US46435U5561 | USA | 0.47% | Distributing | Physical |
| MSCI ACWI IMI Robotics & AI ESG Filtered Index | |||||
| SCI Robotics & AI ESG Screened UCITS ETF Acc |
LU1861132840 | Luxembourg | 0.40% | Accumulating | Physical |
| Nasdaq Global Artificial Intelligence and Big Data Index | |||||
| Xtrackers Artificial Intelligence & Big Data UCITS ETF 1C |
IE00BGV5VN51 | Ireland | 0.35% | Accumulating | Physical |
| Nasdaq CTA Artificial Intelligence Index | |||||
| WisdomTree Artificial Intelligence UCITS ETF USD Acc |
IE00BDVPNG13 | Ireland | 0.40% | Accumulating | Physical |
| First Trust Nasdaq Artificial Intelligence and Robotics ETF |
US33738R7200 | USA | 0.65% | Distributing | Physical |
| Robo Global Artificial Intelligence Index | |||||
| L&G Artificial Intelligence UCITS ETF | IE00BK5BCD43 | Ireland | 0.49% | Accumulating | Physical |
| Aktiv verwalteter ETF | |||||
| ARK Artificial Intelligence & Robotics UCITS ETF USD Accumulating |
IE0003A512E4 | Ireland | 0.75% | Accumulating | Physical |
Source: Fund managers. Date: September 2, 2024.
Apart from the TER, there are also other investment costs that you should account for. Brokerage fees and custody fees vary depending on which stockbroker you use, so comparing brokers is advisable. Swiss federal stamp duties are always the same no matter which Swiss stockbroker you use.
You can compare stockbrokers using the interactive online trading comparison on moneyland.ch. The checklist for choosing an ETF explains what you should consider when investing with ETFs.
Are there any Swiss AI stocks?
The indexes listed in Table 1 also include Swiss stocks – albeit relatively few. Automation company ABB is present with its robotics division, as is laboratory technology company Tecan which develops digitized and automated laboratory equipment.
In addition to those, there are also other Swiss companies that have key roles to play in the AI boom. The VAT Group, headquartered in Eastern Switzerland, is the global leader in the field of vacuum valves – which are needed for the production of microchips. Other examples include Comet with its vacuum capacitators and plasma control systems, and Inficon with its software and process controls for the microchip manufacturing industry.
Table 3: Selection of Swiss AI stocks
| Company | Headquarters | ISIN |
|---|---|---|
| ABB | Zurich | CH0012221716 |
| Comet Holding | Wünnewil-Flamatt | CH0360826991 |
| Inficon | Bad Ragaz | CH0011029946 |
| Tecan Group | Männedorf | CH0012100191 |
| VAT Group | Haag (Sennwald) | CH0311864901 |
Date: September 5, 2024.
What are the risks of investing in AI stocks?
There is always a risk of loss attached to all stock investments. The risk if highest if you invest in just a few individual stocks. High losses – or even a total loss – are always possible at any time.
There are a number of additional risks that specifically apply to investments in AI stocks and ETFs:
You can minimize many of these risks by diversifying your stock portfolio as much as possible. That means you should include stocks from many different countries and industry sectors, while using AI stock investments as just one of many different components. You should also note that many companies that lead in the AI sector, such as Nvidia, already have dominant positions in many global stock indexes and global ETFs. You do not necessarily need to buy shares in a specialized ETF in order to invest in AI.
How profitable are AI stocks?
A performance comparison shows that the AI sub-index MSCI ACWI IMI Robotics & AI Index delivered better performance than its parent index Performance MSCI ACWI IMI almost every year since 2016.
Table 4: Performance comparison of the MSCI ACWI IMI and the MSCI ACWI IMI Robotics & AI Index (Performance in US dollars)
| Year | Performance MSCI ACWI IMI |
Performance MSCI ACWI IMI Robotics & AI Index |
|---|---|---|
| 2016 | 6.18% | 10.56% |
| 2017 | 21.66% | 39.25% |
| 2018 | -11.79% | -2.05% |
| 2019 | 23.86% | 36.78% |
| 2020 | 14.36% | 42.28% |
| 2021 | 16.52% | 20.93% |
| 2022 | -19.84% | -36.60% |
| 2023 | 19.48% | 57.59% |
| Annualized 5-year performance |
9.99% | 18.86% |
| Annualized performance since November 30, 2015 |
8.30% | 17.77% |
Source: MSCI. Performance in USD and exclusive dividends. End date for 5-year performance and performance since November 20, 2015: August 30, 2024.
Note: This article is published for informational purposes only, and should not be considered investment advice. moneyland.ch does not accept any liability in relation to this article.
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