Artificial intelligence (AI) stocks have soared in recent times into the hundreds and even thousands of dollars, and you may feel that some are out of reach. In fact, just recently, players like Nvidia and Broadcom announced stock splits to bring down the prices of their high-flying stocks. But what if I told you that today, for less than $200 you could buy exposure to many exciting AI players including these market giants?
It isn't too good to be true. You actually can do this by getting in on an AI exchange-traded fund (ETF). These funds hold a wide range of AI players, offering you a chance to benefit from many potential winners -- without the tough job of choosing stocks one by one. A great ETF to consider is the Roundhill Generative AI & Technology ETF (CHAT -1.36%). Today it's trading for about $37, so with $200 you can buy a few shares -- and immediately invest in dozens of promising AI stories. Let's find out more.
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How to buy an ETF
First, a quick word about ETFs. These funds trade daily like stocks, and you can purchase them as you would a stock -- making it easy for you as a stock investor to incorporate them into your investing routine. One thing to keep in mind is they do come with fees known as expense ratios. You'll want to be sure to invest in ETFs with an expense ratio of less than 1% so that those fees don't chip away at your returns over time.
Now, let's talk about the Roundhill AI and tech ETF. Though it's actively managed, meaning managers select stocks for the fund, its expense ratio is only 0.75% -- so it fits into our investment criteria. This fund is rather new to the scene, launching about a year ago, but since it's climbed 45%, largely surpassing the performance of the S&P 500.
The fund favors companies that are involved in generative AI or the use of AI systems to create new data. These players may develop platforms for AI training, infrastructure for workflows, or be involved in enterprise or consumer software for example.
The fund's top holdings right now probably won't surprise you. They include Nvidia, Microsoft, and Alphabet, weighted from more than 5% to 8%. But the Roundhill fund doesn't stop there and includes many others in the field, from iPhone giant Apple to software-as-a-service company Palantir Technologies.
The advantage of an artificial intelligence ETF
Of course, the fund's double-digit gain may seem small compared to the performances of certain individual players -- like Nvidia -- that have skyrocketed. But here's the advantage of investing in this ETF. Over time, you may benefit from not just one AI winner but from many. And if forecasts for AI market growth are right -- analysts expect the AI market to surpass $1 trillion by the end of this decade -- this could result in significant gains for a number of players.
Investing in an AI ETF also reduces your risk because you aren't just relying on the successes of a couple of players -- and if certain stocks disappoint, the positive performance of others may compensate. So investing in this sort of fund is a safer way to bet on this high-growth field than investing in just one or two individual stocks.
All of this means that, today, in the early days of the AI growth story, it's a fantastic idea to bet on a variety of AI companies that could see their earnings take off potentially in the near term and over the long run too. And by investing in the Roundhill ETF you don't have to do the heavy lifting of stock picking, making this a no-brainer investment to make right now and hold onto as this AI growth story develops.
