Best AI ETFs to watch now

What is an AI ETF?

An AI ETF is an exchange-traded fund that invests in companies linked to artificial intelligence and related technologies. Rather than buying shares in a single AI company, investors gain exposure to a basket of businesses operating across areas such as:

• Machine learning 
• Cloud computing 
• Semiconductors 
• Robotics 
• Data infrastructure 
• Automation software 

Some AI ETFs focus heavily on large US technology companies, while others target narrower themes such as robotics or next-generation computing.

Because ETFs trade on exchanges like shares, they can be bought and sold throughout the trading day. This makes them different to mutual funds because mutual funds are typically priced and traded only once per day after the market closes.

Why are investors watching AI ETFs now?

Artificial intelligence continues to reshape industries ranging from technology and healthcare to cybersecurity and automation. As investment in AI infrastructure accelerates, many investors are looking at AI-focused ETFs as a way to gain diversified exposure to the sector rather than backing individual companies. 

Several AI companies have seen stellar returns: AI ETF investing allows you to participate in the wider market rally without the risk of picking the wrong stocks. However, past performance is not an indicator of future returns.

Interest in AI investing has accelerated sharply over the past two years, driven by advances in generative AI, rising corporate spending on computing infrastructure and strong earnings growth from semiconductor companies. 

Right now, several themes are supporting demand for AI-related investments:

Growth in AI infrastructure spending

Large technology firms continue investing heavily in data centres, cloud computing and AI chips, creating strong demand across the semiconductor supply chain. 

Expansion beyond the tech sector

AI is increasingly being adopted in industries such as healthcare, finance and manufacturing, broadening the range of companies benefiting from the trend.

Competition among major technology firms

Global competition between companies developing AI models and platforms has intensified, increasing investment across the sector.

Investor appetite for growth themes

As expectations around interest rates shift, growth-focused sectors such as technology often attract increased attention from investors.

However, AI-related stocks can also be highly volatile, particularly when valuations become stretched or earnings expectations are missed. In addition, some analysts are worried about a dot-com style bubble forming.

AI ETFs to watch right now

The following ETFs are widely followed because of their exposure to AI-related sectors, semiconductor demand and broader technology trends. These examples are not recommendations and have been chosen for their significant market valuations.

iShares Automation & Robotics UCITS ETF

This ETF focuses on companies involved in robotics, automation and AI-driven industrial technology. Holdings include businesses linked to manufacturing automation, robotics systems and semiconductor equipment. As of now, its two largest holdings are Advantest Corporation and Intel Corporation, while the fund carries a total expense ratio of 0.40%.

The fund has attracted attention as companies increasingly invest in automation to improve productivity and reduce labour costs. Ongoing demand for industrial AI applications has helped keep the sector in focus, particularly as manufacturers modernise supply chains and production facilities.

WisdomTree Artificial Intelligence UCITS ETF

WisdomTree's AI ETF provides exposure to companies expected to benefit from advances in artificial intelligence technology, including software, cloud infrastructure and semiconductor firms. As of now, its two largest holdings are Micron Technology and SK hynix, while the fund has a total expense ratio of 0.40%.

Investor interest has grown alongside the rapid expansion of generative AI tools and rising demand for computing power. At the same time, markets remain sensitive to earnings expectations and the pace at which AI monetisation develops across the industry.

L&G Artificial Intelligence UCITS ETF

This ETF targets companies involved in AI infrastructure, big data and machine learning technologies. It includes firms operating across both software and hardware segments. Its two largest holdings currently are Nebius Group and Lumentum Holdings, and the fund carries a total expense ratio of 0.49%.

Right now, many investors are monitoring whether strong AI-related revenue growth can justify elevated valuations across parts of the technology sector. This has kept ETFs with diversified AI exposure firmly on watchlists. This is despite diversification within a theme only offering partial downside protection in the event of a wider market pullback.

Global X Robotics & Artificial Intelligence ETF

The Global X Robotics & Artificial Intelligence UCITS ETF combines exposure to robotics, AI and automation businesses globally. It spans sectors including industrial technology, semiconductors and healthcare automation. Its largest holdings currently include NVIDIA and Intuitive Surgical, while the fund has a total expense ratio of 0.50% for the UCITS version.

The fund reflects broader themes around digital transformation and efficiency improvements. Demand for AI-enabled automation remains a major market focus as businesses look to offset rising costs and improve operational efficiency.

What drives AI ETF performance?

AI ETFs are influenced by a combination of technology trends, economic conditions and investor sentiment.

Because many AI ETFs are concentrated in technology stocks, they can be particularly sensitive to shifts in market expectations.

Advantages and risks of AI ETF investing

Many investors invest in AI ETFs as aprt of a wider diversified portfolio strategy. For investors who would like their capital managed for them, IG Smart Portfolios are a popular choice.

How to invest in AI ETFs 

There are several ways to gain exposure to AI ETFs depending on your objectives and risk tolerance. 

Some investors buy ETFs outright through share dealing accounts, while others trade price movements using leveraged products such as CFDs or spread bets. 

Before investing, it’s important to understand the ETF’s structure, holdings, costs and level of concentration. Some funds are heavily weighted towards a small number of technology companies, which can increase volatility. 

Risks to understand before investing in AI ETFs

AI investing is closely tied to expectations around future growth, which means sentiment can shift quickly.

Many AI-related companies trade at relatively high valuations compared to broader markets. If growth expectations weaken or earnings disappoint, prices can fall sharply.

Competition within the sector is also intense. While some firms may emerge as long-term winners, others could struggle to commercialise AI technologies effectively. 

For traders using leveraged products, losses can exceed initial deposits.