Instead of Buying Nvidia Stock, I’m Buying This AI ETF Hand Over Fist

Generative AI is attracting great interest among investors, and this ETF provides great exposure to the sector.

Up 467% over the last three years, Nvidia (NVDA 3.46%) stocks soared as investors rushed to gain exposure to artificial intelligence (AI). Those looking to add AI exposure to their portfolios may feel like they’ve missed the boat on Nvidia stock. Additionally, they may feel overwhelmed by the variety of other choices to consider.

But the Roundhill Generative AI and Technology ETF (CAT 2.19%) has all these bases covered. In addition to holding a large position in Nvidia, the Roundhill Generative AI & Technology ETF provides exposure to a variety of other AI-focused companies that stand to benefit from the growth of generative AI, machine learning and major language models.

it’s going to be big

Not long ago, people had little exposure to generative AI. These days it seems unavoidable.
And it is almost certain that its presence in our lives will continue to grow. In fact, many experts predict that the situation will accelerate considerably. Business intelligence firm Markets and Markets predicts that the generative AI market will be worth about $21 billion in 2024 and will soar at a compound annual growth rate (CAGR) of 37% through 2030, when it will reach 137 billion dollars.

Eager to benefit from the growth of generative AI, investors have unsurprisingly flocked to Nvidia shares. A leader in graphics processing units (GPUs), Nvidia helps data centers manage the enormous computing demands placed on them by generative AI platforms. However, with its recent rise, Nvidia stock now trades at 69 times operating cash flow (OCF), making it unattractive for those looking to avoid high valuations.

An AI ETF like no other

Calling the Roundhill Generative AI & Technology ETF “the world’s first generative AI ETF,” Roundhill Investments, the fund manager, cites research from Golden Man Sachs which estimates that AI can contribute to $7 trillion in economic growth worldwide over the next 10 years.

With 46 holdings in the fund, the Roundhill Generative AI & Technology ETF provides investors with broad exposure to leading companies that will drive the advancement of generative AI. Of course, Nvidia has a prominent position in the ETF with a weighting of 10.1%, making it the largest position, so those wary of Nvidia stock alone will still have some exposure. To complete the first three positions, Microsoft (NASDAQ:MSFT) And Alphabet (NASDAQ:GOOGL) are the second and third largest positions respectively.

While Nvidia makes the GPUs that support AI generative computing, Microsoft develops AI solutions such as Copilot, an AI assistant that integrates with several Microsoft products. The company’s reach in the AI ​​space expands even further with its multibillion-dollar investment in ChatGPT. Similarly, Google is integrating AI into offerings such as Gemini, an AI-powered generative chatbot. And exploring the potential of AI in various applications, Google operates the DeepMind Lab where it explores the development of artificial general intelligence.

While Meta Platforms (NASDAQ:META)whose large Llama 3 language model can be used to develop generative AI applications, holds the fifth-largest position in the Roundhill Generative AI & Technology ETF, it’s not just Magnificent Seven’s stock that ranks first places; Adobe (NASDAQ:ADBE) is the fourth largest position. A generative AI application, Adobe’s Firefly can be used in various Adobe products, such as Express, Photoshop, and Illustrator.

Is Roundhill AI and Generative Technology Right for You?

There’s no denying that Nvidia stock is extremely attractive right now given the company’s position as a stalwart GPU developer, but it’s not the only generative AI play in town. Investors who are aware of this fact – and are looking for comprehensive exposure to the sector – will therefore want to pay particular attention to the Roundhill Generative AI & Technology ETF, which offers a unique opportunity to gain broad exposure to generative AI. I know I am. This exchange-traded fund (ETF) has been on my watchlist for several months now, and I plan to start a position in the coming weeks to sit in the niche of my portfolio carved out for growth investments.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Scott Levine has no position in any of the securities mentioned. The Motley Fool holds positions and recommends Adobe, Alphabet, Goldman Sachs Group, Meta Platforms, Microsoft and Nvidia. The Motley Fool 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.

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Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe. Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
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