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Buoyant Long-Term Outlook for AI

BY | ETF Database
11/08/2024 | 33 VIEWS
The recent onslaught of earnings reports from the communication services and technology sectors has provided analysts and investors with some insight into Corporate America’s 2025 plans for artificial intelligence (AI) spending. Still, considerable debate lingers about the validity of those expenditures and AI broadly. For investors taking the long view of AI, exchange traded funds such as the Invesco QQQ Trust QQQ and the Invesco NASDAQ 100 ETF QQQM still merit consideration, because AI is making technological strides and its use cases are expanding.Perhaps boding well for QQQ/QQQM member firms is that AI has recently advanced to the point that it can process complex problems in a flash, its code generation capabilities are increasing, and its ability to automate important though mundane document-laden tasks is on the rise. Those factors, among others, could signal deep AI expansion opportunities.For QQQ, QQQM, AI Opportunities GaloreOne of the principal reasons AI has an attractive long-term investment thesis is its ability to intersect with other technologies. Count cloud computing as one that’s relevant to QQQ/QQQM investors, because the ETFs hold scores of cloud companies. The AI/cloud combination also has implications for chipmakers, of which plenty reside in the Invesco ETFs. “Cloud service providers, large enterprises and government entities are investing heavily to build and equip the datacentres required to support AI initiatives. Our outlook for investments in digital infrastructure over the next several years is positive,” noted BNP Paribas. For AI adopters and enablers alike — the statuses describing the bulk of the AI-related names in QQQ and QQQM — expansion beyond AI infrastructure is vital to driving long-term returns. “We expect the long-term returns of developing and deploying AI technology to be attractive. Companies that expand beyond the infrastructure layer and create new applications or services are likely to see higher returns on investment. However, the high cost of components is a key variable,” added BNP Paribas. Another feature increases the potential allure of QQQ and QQQM. The ETFs aren’t dedicated AI funds, but these products offer AI-related investment depth. This could be a favorable trait as the technology continues making strides and expanding use cases. “As AI technology advances and becomes more pervasive, we believe the investment opportunities among publicly traded equities are broadening. Capitalising on the positive trends while avoiding potential pitfalls will require an active approach to investment management,” concluded BNP Paribas. For more news, information, and analysis, visit the ETF Education Channel.

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