Meta Platforms Inc. (META), formerly known as Facebook, has captivated Wall Street with its impressive resurgence, marking one of the most remarkable comeback tales in recent financial history. Following a challenging shift towards the metaverse and navigating a bearish market in 2022, Meta has experienced a noteworthy revival.
On February 1st, the company disclosed its earnings for the fourth quarter and full-year 2023, triggering a staggering $204.5 billion surge in market capitalization the subsequent day, accompanied by a 20% surge in its share price.
This resurgence is attributed to robust revenue growth, the announcement of a $50 billion increase in share buybacks, and the initiation of a quarterly dividend of $0.50 per share, a first for the company.
While Meta's financial performance has undoubtedly thrilled investors, those with a long-term outlook may find greater intrigue in the tailwinds generated by an earlier strategic move: the company's substantial investment in Nvidia Corp. (NVDA) graphics processing units (GPUs).
This investment was aimed at fortifying Meta's artificial intelligence (AI) infrastructure, marking a pivotal step in the escalating competition within the AI landscape.
Other major players in the technology sector, such as Microsoft Corp. (MSFT) and Alphabet Inc. (GOOG, GOOGL), are also reallocating significant resources towards AI projects, gearing up for a future where these technologies play a central role in their operations and research endeavors.
According to Tejas Dessai, assistant vice president and research analyst at Global X ETFs, "We expect the AI market to reach over half a trillion dollars in value by 2024 even amid a slowdown in venture capital funding, as organizations across various sectors adopt AI to enhance efficiency, cut costs, and enhance customer experiences."
For investors seeking to capitalize on this growth, thematic exchange-traded funds (ETFs) focused on AI offer accessible options. These ETFs provide exposure to leading companies at the forefront of the global AI industry, enabling investors to participate in the sector's returns without the need to pick individual stocks.
"We're in the early stages of the AI cycle, and proper diversification is extremely important – be it across company stages or geographies – because it's difficult to pick a winner or two this early," Dessai notes. "With a thematic ETF, you're following an idea as opposed to a complex strategy."
Here are six of the best AI ETFs to consider:
Invesco AI and Next Gen Software ETF (IGPT) with an expense ratio of 0.60%
Roundhill Generative AI & Technology ETF (CHAT) with an expense ratio of 0.75%
Global X Artificial Intelligence & Technology ETF (AIQ) with an expense ratio of 0.68%
Global X Robotics & Artificial Intelligence ETF (BOTZ) with an expense ratio of 0.69%
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) with an expense ratio of 0.47%
Amplify AI Powered Equity ETF (AIEQ) with an expense ratio of 0.75%
Looking ahead to 2024, Rene Reyna, head of thematic and specialty product strategy at Invesco, believes that the AI trend will broaden in scope, encompassing additional segments of the market with new technological advancements, a more stable interest rate environment, and the ongoing impact of fiscal stimulus broadening innovation across multiple industries.
Meta Platforms Inc.'s remarkable financial turnaround, coupled with strategic investments in artificial intelligence, has ignited investor interest, positioning the company as a prominent player in the evolving tech landscape.
