ETFs
Instead of Buying Nvidia Stock, I’m Buying This AI Hand Over Fist ETF
Up 467% over the last three years, Nvidia (NASDAQ:NVDA) shares soared as investors rushed to gain artificial intelligence (AI) exposure. Those looking to add AI exposure to their portfolios may feel like they’ve missed the boat on Nvidia stock. Additionally, they may feel overwhelmed by the variety of other choices to consider.
But the Roundhill Generative AI and Technology ETF (NYSEMKT:CHAT) covers all of these bases. In addition to holding a large position in Nvidia, the Roundhill Generative AI & Technology ETF provides exposure to a variety of other AI-focused companies that stand to benefit from the growth of Generative AImachine learning and large language models.
it’s going to be big
Not long ago, people had little exposure to generative AI. These days, it seems unavoidable.
And it is almost certain that its presence in our lives will continue to increase. In fact, many experts predict that the situation will accelerate considerably. Business intelligence firm Markets and Markets predicts that the generative AI market will be worth about $21 billion in 2024 and will soar at a compound annual growth rate (CAGR) of 37% through 2030, when it will reach 137 billion dollars.
Eager to benefit from the growth of generative AI, investors have unsurprisingly flocked to Nvidia shares. A leader in graphics processing units (GPUs), Nvidia helps data centers manage the enormous computing demands placed on them by generative AI platforms. However, with its recent rise, Nvidia stock now trades at 69 times operating cash flow (OCF), making it unattractive for those looking to avoid high valuations.
An AI ETF like no other
Calling the Roundhill Generative AI & Technology ETF “the world’s first generative AI ETF,” Roundhill Investments, the fund manager, cites research from Golden Man Sachs which estimates that AI can contribute to $7 trillion in economic growth worldwide over the next 10 years.
With 46 holdings in the fund, the Roundhill Generative AI & Technology ETF provides investors with broad exposure to leading companies that will drive the advancement of generative AI. Of course, Nvidia has a prominent position in the ETF with a weighting of 10.1%, making it the largest position, so those wary of Nvidia stock alone will still have some exposure. To complete the first three positions, Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ: GOOGL) occupy second and third place, respectively.
While Nvidia makes the GPUs that support AI generative computing, Microsoft develops AI solutions such as Copilot, an AI assistant that integrates with several Microsoft products. The company’s reach in the AI space expands even further with its multibillion-dollar investment in ChatGPT. Similarly, Google is integrating AI into offerings such as Gemini, an AI-powered generative chatbot. And exploring the potential of AI in various applications, Google operates the DeepMind Lab where it explores the development of artificial general intelligence.
The story continues
While Meta Platforms (NASDAQ: META), whose large Llama 3 language model can be used to develop generative AI applications, holds the fifth-largest position in the Roundhill Generative AI & Technology ETF, it’s not just shares of Magnificent Seven who occupy the first places; Adobe (NASDAQ:ADBE) is the fourth largest holding. A generative AI application, Adobe’s Firefly can be used in various Adobe products, such as Express, Photoshop, and Illustrator.
Is Roundhill AI and Generative Technology Right for You?
There’s no denying that Nvidia stock is extremely attractive right now given the company’s position as a stalwart GPU developer, but it’s not the only generative AI play in town. Investors who are aware of this fact – and are looking for comprehensive exposure to the sector – will therefore want to pay particular attention to the Roundhill Generative AI & Technology ETF, which offers a unique opportunity to gain broad exposure to generative AI. I know I am. This exchange-traded fund (ETF) has been on my watchlist for several months now, and I plan to start a position in the coming weeks to sit in the niche of my portfolio carved out for growth investments.
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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Scott Levine has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Adobe, Alphabet, Goldman Sachs Group, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.
Instead of Buying Nvidia Stock, I’m Buying This AI Hand Over Fist ETF was originally published by The Motley Fool