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The 2 Best AI ETFs to Invest $1,000 In Right Now - A Summary of the Fool's December 24, 2025 Guide

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  Published in Stocks and Investing on Wednesday, December 24th 2025 at 16:18 GMT by The Motley Fool
      Locale: New York, UNITED STATES

The 2 Best AI ETFs to Invest $1,000 In Right Now – A Summary of the Fool’s December 24, 2025 Guide

The World of AI has exploded from niche tech play to a headline‑making catalyst for growth. Investors looking to capture that momentum have turned to exchange‑traded funds (ETFs) that focus on artificial intelligence (AI), robotics, and the broader tech ecosystem. In its December 24, 2025 article “The 2 Best AI ETFs to Invest $1,000 in Right Now,” The Fool cuts through the noise, evaluating the sector’s most compelling options and offering a straightforward, dollar‑cost‑averaging strategy for new entrants.

1. Why AI‑Focused ETFs Are Worth the Attention

The article opens with a primer on why AI is a “universal driver of innovation.” It cites three key factors that make the space attractive to retail investors:

1. Disruptive Growth: AI is infiltrating everything from autonomous vehicles to healthcare diagnostics, creating new revenue streams for both incumbents and startups.
2. Scalability of Adoption: As infrastructure costs fall, companies can deploy AI at scale—an effect that is reflected in rising earnings for many tech leaders.
3. Positive Outlooks: Consensus analyst reports (e.g., Bloomberg Intelligence, CB Insights) project a CAGR of 25–30 % for AI‑related products and services through 2030.

These macro drivers provide a compelling narrative for the two ETFs the Fool recommends: Global X Robotics & Artificial Intelligence ETF (BOTZ) and iShares Robotics and Artificial Intelligence Multisector ETF (IRBO).

2. Global X Robotics & Artificial Intelligence ETF (BOTZ)

Focus & Composition

• Sector Target: Robotics, AI, and automation across North America and select international markets.
• Top Holdings: NVIDIA (NVDA), Apple (AAPL), Amazon (AMZN), and Intuitive Surgical (ISRG).
• Weightings: Tech giants dominate, with each top holding representing 8‑12 % of the portfolio.

Performance Snapshot

• YTD Return: ~18 % (as of Dec 24, 2025).
• 3‑Year CAGR: 15.6 %.
• Expense Ratio: 0.68 %—slightly above the average for tech‑focused ETFs but justified by a robust tracking error profile.

Why the Fool Likes It

• Liquidity: Average daily volume exceeds 250k shares, making it easy to enter or exit positions.
• Track Record: Since its launch in 2017, BOTZ has delivered consistent outperformance relative to the MSCI Global Robotics & Automation Index.
• Risk Profile: The concentration in large-cap, well‑capitalized firms mitigates the volatility often associated with early‑stage AI companies.

What’s Behind the Numbers

The article links to the ETF’s official fact sheet and prospectus, offering deeper dives into holdings turnover and sector allocation. A notable point is BOTZ’s exposure to the manufacturing sector, which the author argues is a key enabler of AI at scale—particularly through “smart factories” that rely on machine vision and predictive maintenance.

3. iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)

Focus & Composition

• Sector Target: Broad, global exposure across AI, robotics, and automation.
• Top Holdings: NVIDIA (NVDA), Alphabet (GOOGL), and Baidu (BIDU).
• Weightings: Slightly more diversified than BOTZ, with the top 10 holdings making up roughly 30 % of the portfolio.

Performance Snapshot

• YTD Return: ~22 % (as of Dec 24, 2025).
• 3‑Year CAGR: 17.3 %.
• Expense Ratio: 0.46 %—the lowest among the two ETFs, offering a cost advantage.

Why the Fool Likes It

• Diversification: IRBO’s global stance covers both U.S. and emerging‑market robotics players, providing exposure to regions where AI adoption is accelerating.
• Expense Efficiency: The lower fee structure makes it attractive for investors seeking incremental cost savings over the long term.
• Alpha Potential: With a broader mandate, IRBO captures high‑growth segments such as autonomous driving and AI‑powered fintech, which are projected to grow at double‑digit rates.

What’s Behind the Numbers

The article includes a link to the ETF’s “Smart Portfolio” guide, illustrating how IRBO rebalances quarterly to maintain target sector weights. It also references a Bloomberg report that highlights the ETF’s exposure to “Industry 4.0” technologies, suggesting that the fund could benefit from a macro shift toward digitalized manufacturing.

4. How to Split Your $1,000

The Fool’s author recommends a 50/50 split—$500 in BOTZ and $500 in IRBO. The rationale:

• Risk‑Mitigation: Balancing the higher fee but lower‑volatility BOTZ against the lower‑fee, higher‑growth IRBO balances cost and potential upside.
• Diversification: The two funds collectively provide exposure to both U.S. and international AI leaders, reducing concentration risk.
• Dollar‑Cost Averaging: Starting with a modest sum allows new investors to test the waters and gradually add to the position as market volatility subsides.

The article also warns about potential “cognitive dissonance”—the temptation to chase higher returns by over‑investing in a single AI ETF. It advises setting a realistic monthly contribution and sticking to the plan.

5. Potential Risks and Caveats

1. Sector Concentration: Despite diversification, both funds remain heavily weighted to a handful of tech giants. A significant downturn in any of those companies could affect portfolio returns.
2. Valuation Levels: AI and robotics stocks have been trading at premium multiples; a market correction could see the sector’s valuations compress.
3. Regulatory Headwinds: Increased scrutiny on AI ethics, data privacy, and autonomous vehicle regulations may slow growth.

The Fool encourages readers to read the fund prospectus and consider consulting a financial advisor before committing.

6. Final Takeaway

By anchoring its analysis in performance data, expense ratios, and sector exposure, the Fool’s article presents a pragmatic approach to entering the AI space via ETFs. Whether you’re a tech enthusiast or a cautious investor, the 50/50 allocation between BOTZ and IRBO offers a balanced, low‑cost entry that capitalizes on AI’s projected growth while managing risk.

For full details, the article links to:

• BOTZ Fact Sheet & Prospectus – [ https://www.globalxetf.com/products/etf/robotics-ai/botz/ ]
• IRBO Fact Sheet & Prospectus – [ https://www.ishares.com/us/products/233735/ishares-robotics-and-artificial-intelligence-multisector-etf/ ]
• Bloomberg AI Sector Analysis – [ https://www.bloomberg.com/markets/sector/ai ]
• The Fool’s Investment Guides – [ https://www.fool.com/investing/ ]

These resources give deeper insights into each fund’s methodology, holdings, and performance trends, providing the context necessary for an informed investment decision.