Artificial intelligence, as a core force driving technological transformation, has become a significant theme in the capital markets in recent years. Related stocks have not only propelled the U.S. stock market to repeated record highs but also attracted trillions of dollars in global capital into infrastructure sectors like data centers. However, the performance of individual AI stocks diverges sharply. For instance, Palantir Technologies (PLTR) has seen significant gains in 2025, while Upstart Holdings (UPST) has declined over the same period. This volatility highlights the risks of betting directly on a single company. For most investors, achieving diversification through exchange-traded funds might be a more prudent way to participate in the growth opportunities presented by artificial intelligence.
Take the iShares Future AI and Tech ETF (ARTY) as an example. By holding 48 different artificial intelligence stocks, this fund helps investors gain exposure to the entire industry chain at once. Its investment scope covers three critical segments: software, services, and infrastructure, effectively dispersing the risks associated with poor performance by any single company. At the software level, the ETF’s holdings include companies like Palantir, which helps customers unlock data value through its AI platform, and productivity giants like Microsoft, which deeply integrates its Copilot AI assistant into core office software.
In the services domain, the ETF invests in companies like Alphabet. This company not only integrates AI features into its dominant search engine but also provides developers with comprehensive cloud services through the Google Cloud Platform. Meanwhile, companies like Snowflake offer key tools, such as their Cortex AI platform, for enterprises developing their own AI applications. Infrastructure serves as the physical cornerstone of AI development. In this segment, the ETF focuses on allocating to leading companies like NVIDIA. NVIDIA provides the world’s leading data center chips and networking equipment, with its latest products specifically designed to handle the intensive workloads of the most advanced AI models. Additionally, competitors like AMD are actively developing next-generation data center solutions, indicating that this field will continue to experience rapid innovation and competition.
This ETF employs an active management strategy, with a professional team dynamically adjusting the portfolio to capture the best opportunities in the sector. This strategy has demonstrated the potential to outperform the broader market, particularly after its reorganization to focus more purely on the AI field. However, active management also comes with higher operational costs, with its 0.47% expense ratio being significantly higher than many passively managed index funds. For long-term investors, whether this cost can be consistently offset by superior returns is a factor requiring ongoing evaluation. The fund also holds a wide range of other key industry companies, including Broadcom, Micron Technology (MU), Amazon (AMZN), Meta Platforms (META), as well as Palo Alto Networks (PANW) and CrowdStrike Holdings (CRWD), further enhancing the portfolio’s diversification and representativeness.
Overall, for investors bullish on the long-term prospects of artificial intelligence but wishing to avoid the extreme volatility risks associated with individual stocks, actively managed ETFs covering the entire industry chain offer a professional solution.
