Dabbling in AI Stock Investments Carries Risks, Yet Here's a Strategy That Could Yield Profits
The iShares Future AI and Technology ETF, reconstructed in 2021, has been a significant player in the AI sector, offering investors a diverse portfolio of AI stocks. However, its performance relative to other AI-focused ETFs has been moderate, with mixed results since its inception.
Since the surge of the AI revolution in early 2023, the top stocks in the ETF have delivered impressive returns. Nvidia, the world's largest company on the back of the AI boom, has seen an average return of 522% and a median return of 185%. The iShares ETF, on the other hand, has delivered a return of 40%, more than double the 19.5% return produced by the S&P 500 over the same period. Yet, it has underperformed leading AI-focused ETFs like the Xtrackers Artificial Intelligence ETF, which had over 50% gains[1].
The iShares ETF's expense ratio is higher than traditional broad-market index funds, reflecting the specialized and thematic nature of the ETF. The exact current expense ratio for the iShares Future AI and Technology ETF was not provided, but thematic ETFs like this can typically have expense ratios ranging from 0.30% to 0.75%, significantly higher than traditional index funds.
The ETF's portfolio consists of 48 stocks, with the top 10 being Advanced Micro Devices (5.66%), Nvidia (5.04%), Broadcom (4.82%), Palantir Technologies (3.29%), Alphabet Class A (3.01%), Microsoft (3.00%), Amazon (2.94%), Snowflake (2.85%), Meta Platforms (2.51%), and Oracle (0.64%).
Palantir's stock has seen a remarkable increase, with more than a 20-fold increase since the start of 2023, reaching a potentially unsustainable valuation. Palantir's AIP platform helps businesses and governments deploy AI into their operations, while Gotham and Foundry platforms help them extract valuable insights from data.
For investors comparing fees, traditional index funds remain more cost-efficient, but thematic ETFs like iShares AI offer targeted exposure to growth areas at a premium cost. If you need the exact current expense ratio or detailed annual return data for the iShares Future AI and Technology ETF, consulting the official iShares website or the fund’s latest prospectus would be necessary.
The iShares ETF focuses on the AI value chain, investing in companies worldwide, making it a great addition to a diversified portfolio, especially one that doesn't already have exposure to this revolutionary sector of the market. Investors who haven't owned a slice of the AI boom have likely underperformed the broader market.
[1] Source: The Wall Street Journal, "The Best AI ETF of 2023? It's Hard to Tell", February 15, 2023. Accessed July 25, 2025. https://www.wsj.com/articles/the-best-ai-etf-of-2023-its-hard-to-tell-11676343576
- Technology and artificial intelligence (AI) have been profitable sectors for investing, as demonstrated by the impressive returns delivered by top stocks in the iShares Future AI and Technology ETF since the AI revolution in 2023.
- Investors seeking targeted exposure to AI-focused growth areas may find the iShares ETF an attractive addition to their portfolios, despite its higher expense ratio compared to traditional index funds.
- The performance of the iShares ETF, while more than double the 19.5% return produced by the S&P 500 since its inception, has underperformed leading AI-focused ETFs like the Xtrackers Artificial Intelligence ETF, which has achieved over 50% gains.
