ETFs
Investing in the future of AI: BlackRock’s Jacobs talks ETFs
American equity markets (^DJI, ^IXIC, ^GSPC) have gained a lot of ground over the course of 2024 since the start of the year, with much of their rally driven in part by semiconductor and chip stocks like Nvidia (NVDA).
BlackRock US Head of Thematic and Active ETFs Jay Jacobs sits with Brad Smith on wealth! within the framework of Yahoo Finance ETF Report to discuss several notable BlackRock iShares ETFs as they relate to the growing AI landscape and the energy and digital infrastructure requirements that accompany mass adoption.
“What we’re focused on is really…picks and shovels when it comes to artificial intelligence. So we think there will be more adoption of AI, period. That’s a huge technology, it’s transformational,” Jacobs said. “We think that [of] The 5% enterprise adoption rate we see today will increase to 80% in the coming years. »
For more expert insights and the latest market action, click here to watch this full episode of Wealth!
This post was written by Luke Carberry Mogan.
Video transcription
Stocks are mixed about 90 minutes into the trading day.
The Dow Jones and S&P 500 are both trading slightly lower here, with the NASDAQ holding onto its gains for now.
But outside of today’s session, high stocks have performed well this year, thanks in large part to the strength of NVIDIA, more than 38% of the S&P 500’s gains so far are due to semiconductors also known as chips that power the artificial. Intelligence and many other things.
So, is there more room for the AI industry this year to discuss how you can set yourself up for success in the second half?
We have a good friend from the series.
Jay Jacobs Blackrock is responsible for thematic and active ETFs here as part of the ETF report presented by invest QQQ.
Jacques.
Nice to see you here today.
Great to be back, Brad.
Absolutely.
So let’s dive into this topic.
I mean, when so much of the market’s gains so far are concentrated on one central theme, what does that mean for potential broadening and what ETFs might investors consider adding to their portfolio? what if this enlargement began to take even more shape?
I think investors need to take a holistic view of artificial intelligence and really try to understand what is the next step to give up.
What’s the next part of the market that could see similar upsides to what we’ve seen so far in some of the AI segments. Um, what we’re really focused on is what are the picks and shovels in artificial intelligence.
So we think there will be more adoption of AI.
It’s a huge technology.
It’s transformational.
The story continues
We believe that the approximately 5% enterprise adoption we see today will increase to 80% in the coming years.
But which are the companies that, no matter whether you go cloud, whether you go GP T chat, no matter what AI platform you use, will benefit from this evolution.
And what we’re seeing is about a trillion dollars that needs to be spent on AI infrastructure that is digital infrastructure, like data centers and cell towers that you capture in our ID GT ETF .
Um, these are semiconductor companies and not just GP U manufacturers, but a broader semiconductor ecosystem that we capture with our Sox ETF.
So we’re really focusing on the next layer, the picks and shovels that will benefit from building this core technology.
And so where does that drive investors towards things like anything that needs to power data centers.
For example, you think about utilities, you also think about the need for even more cybersecurity around some of these data centers.
Absolutely.
I think energy is a very important aspect here, because you’re going to see massive additional demand for energy, not only from artificial intelligence, but also from the growth of electric vehicles.
Um, you think about the renaissance and American manufacturing that we’re seeing recently, as well as energy demand.
So our electricity grid and our electricity production are not really designed to experience compound annual growth of 2 to 3%.
Meanwhile, I’m getting text messages to turn down my thermostat or my air conditioning and I know all these data centers are going to be built leveraging the grid too.
So therein lies the problem: we don’t yet have the capacity to build more power plants.
This will therefore have an impact on the entire energy infrastructure.
This means more generation will require power line upgrades.
One of the key components that the market does not yet recognize, in my opinion, is copper. Whether you’re building renewable energy, whether you’re building transmission lines, whether you’re building data centers, all paths go through copper and it’s already a metal. it is in a structural undersupply.
So this could be a choke point in the physical construction of AI and energy.
Is there a commodities or copper ETF that investors have clearly seen some volume flowing into.
Yeah.
Well, we’ve seen an uptick in our copper miner, a TF IC OP operation, and that’s precisely why these are the companies that are extracting copper from the ground and making it usable in areas like electricity transmission.
All right.
Some of the original mining, then finally use it here.
Thank you very much, Jay Jay Jacobs Blackrock, Head of Thematic and Active ETFs, good to see you.
I don’t know if you also receive these text messages about the refusal of your, the, that, that hits me a little harder.
Sometimes I just think, come on, text the businesses across the street from me, the commercial real estate agencies.
It was a tough week for that.
It’s great to see you, man.
Happy to see you.