In the realm of investing, there's an old adage that "the trend is your friend." So when it comes to the potential impact of artificial intelligence on the stock market, it's hard to ignore the trend that has been steadily growing. From healthcare to finance, manufacturing to customer service, AI is transforming the way businesses operate and unlocking unprecedented opportunities for growth. As AI continues to evolve and mature this could mean life-changing opportunities within the financial markets for the diligent investors and traders among us.
Now, I could sit here and write a whole bunch of text about what artificial intelligence could do for humanity and the growth of companies, etc...but, we all know this already. What I wanted to bring to light was the rather attractive performance of the AI-sector. We can see this really well when looking at a couple of ETFs. Take a look at $ROBT, an ETF that tracks the Nasdaq CTA Artificial and Robotics Index. The world renowned inverse head & shoulders pattern is clear as day but what is most interesting is the rounding up of the relative strength compared to the broad market. We could be seeing the emergence of new leaders.
The $ROBT ETF is not available to Europeans but you can easily use ETFs like $XMLD, $IROB, or $ROAI to name a few.
An ETF where this trend is a bit more aggressively visible is $BOTZ ($XBOT for my fellow Europeans), which has seen a big jump thanks to the heavily weighted shares of NVIDIA. Regardless, the same story applies.
One other area that might not be an obvious beneficiary of the emergence of AI
within the stock market is Japan. Take a look at the Nikkei 225 index
performing like a dream.
A lot of companies such as Keyence, Fanuc, Omron, etc.. are heavily invested in the development of AI and are located in Japan. Below you can see how the Japanese Nikkei 225 compares to the S&P 500 and Stoxx 600, all three are priced in US Dollars.
Now, we're still sitting in quite a risky market environment so going all-in on AI might not be the best idea. However, if your risk tolerance is a bit higher it wouldn't harm to build a few small positions in some of the AI stocks or ETFs. What do you think? Could we see AI stocks become the new leaders of the upcoming bull market? It is certainly a possibility.