Riding the AI Wave: A Guide to Investing in Artificial Intelligence ETFs

Published in Stocks and Investing on Thursday, August 21st 2025 at 15:34 GMT by The Motley Fool
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The buzz around artificial intelligence (AI) is undeniable, and it’s fueled a surge of interest from investors eager to capitalize on this transformative technology. But navigating the complex landscape of AI companies and technologies can be daunting. Fortunately, Exchange-Traded Funds (ETFs) offer a relatively simple way to gain exposure to the rapidly evolving AI sector without needing to pick individual winners – or losers. This article explores one standout option: the Global X Robotics & Artificial Intelligence ETF (BOTZ), examining its holdings, performance, and suitability for different investment strategies.

Why Invest in AI? The Potential is Massive.

Before diving into BOTZ specifically, it's crucial to understand why AI is attracting so much attention. AI isn’t just about futuristic robots; it’s woven into the fabric of modern life. From self-driving cars and personalized medicine to fraud detection and automated customer service, AI applications are revolutionizing industries and driving productivity gains. Experts predict continued exponential growth in AI adoption across various sectors, suggesting significant investment opportunities for those who get in early.

BOTZ: A Deep Dive into the Leading Robotics & AI ETF

The Global X Robotics & Artificial Intelligence ETF (BOTZ) is arguably one of the most popular and well-established ETFs focused on this sector. Launched in 2015, BOTZ aims to provide investment results that correspond with the performance of companies involved in robotics, automation, and artificial intelligence. It’s a concentrated fund, meaning it holds a relatively small number of stocks compared to broader market ETFs.

Key Features & Holdings:

Focus: BOTZ isn't solely an AI ETF; it encompasses robotics and automation as well. This broader scope provides diversification within the technological landscape.
Holdings: As of June 2024, BOTZ holds approximately 35 companies. The fund’s top holdings consistently include industry giants like: Nvidia (NVDA): A dominant player in AI chips and graphics processing units (GPUs), essential for training and running AI models. Nvidia's influence is so significant that it constitutes a substantial portion of the ETF's assets, often exceeding 20%. [ Learn more about Nvidia ] Intuitive Surgical (ISRG): A leader in surgical robotics, particularly known for its da Vinci surgical system. [ Explore Intuitive Surgical’s technology ] ABB Ltd (ABB): A global leader in industrial automation and robotics solutions. [ Discover ABB's offerings ] Keyence Corporation (6861): A Japanese manufacturer of sensors, vision systems, and other automation equipment. * Fanuc Corp (FANUY): A major supplier of industrial robots and CNC machining centers.
Geographic Exposure: While the fund is called "Global," a significant portion of its holdings are based in the United States. However, it does have exposure to companies in Europe, Japan, and other regions.
Expense Ratio: BOTZ has an expense ratio of 0.68%, which is slightly higher than some broader market ETFs but considered reasonable for a specialized sector fund.

Performance: A Rollercoaster Ride with Significant Upside

BOTZ’s performance reflects the volatility inherent in the technology and AI sectors. It experienced significant growth during the initial AI boom, followed by periods of correction as investor sentiment shifted. However, over the long term, BOTZ has generally outperformed broader market indices like the S&P 500, driven primarily by the exceptional performance of Nvidia.

Is BOTZ Right for You? Considerations Before Investing.

Investing in BOTZ, or any AI-focused ETF, requires careful consideration:

Risk Tolerance: The AI sector is still relatively nascent and subject to rapid technological advancements and regulatory changes. This makes it a higher-risk investment compared to more established sectors.
Investment Horizon: AI’s transformative potential will likely unfold over several years, so BOTZ is best suited for investors with a long-term perspective (at least 5+ years).
Diversification: Because Nvidia dominates the fund's holdings, investing in BOTZ concentrates your exposure to a single company. Consider diversifying your portfolio across other sectors and asset classes.
Understanding the Underlying Technology: While you don’t need to be an AI expert, having a basic understanding of the technologies driving the sector can help you make informed investment decisions. Alternatives & Considerations:

While BOTZ is a leading option, several other AI-related ETFs exist, each with its own nuances and strategies:

ROBO Global Robotics and Automation Index ETF (ROBO): Offers broader exposure to robotics and automation across various industries.
WisdomTree Artificial Intelligence and Innovation Fund (WTAI): Focuses on companies involved in AI innovation, including software development and data analytics.
First Trust Nasdaq Artificial Intelligence Activeshare ETF (AIQ): Uses an actively managed approach to select AI-related stocks.

Conclusion: Embracing the Future with a Measured Approach

The artificial intelligence revolution is underway, presenting compelling investment opportunities for those willing to take on some risk. The Global X Robotics & Artificial Intelligence ETF (BOTZ) provides a convenient and relatively accessible way to participate in this growth. However, it's crucial to understand the fund’s holdings, performance history, and associated risks before investing. As with any investment, thorough research and a well-defined strategy are essential for navigating the exciting – and potentially volatile – world of AI ETFs. Remember to consult with a financial advisor to determine if BOTZ or another AI ETF aligns with your individual investment goals and risk tolerance.

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Riding the AI Wave: A Guide to Investing in Artificial Intelligence ETFs