The artificial intelligence (AI) investment theme is 2023’s indomitable force. For investors with fear of missing out (FOMO) and those with long-term perspectives, the good news is that AI is still in its infancy.
Obviously, AI has profound implications for the technology sector – the foundation of AI. AI is one of the primary reasons tech stocks are soaring this year, providing ballast to cloud computing and semiconductor stocks and many more.
In other words, AI’s disruptive properties are rooted in technology, but aren’t confined to this realm. That’s a long-term positive because the more industries in which AI can be deployed, the better the adoption trajectory and, potentially, the better the investment outcomes will be. Encouraging signs are mounting on this front and they extend well beyond the established though still growing industrial warehouse robotics usage case.
With that in mind, here are some examples of exchange traded funds with exposure to industries that could be positively disrupted by AI.
VanEck Future of Food ETF (YUMY)
The VanEck Future of Food ETF (YUMY) is an actively managed fund dedicated to the intersection of agriculture and tech, also known as “agritech.” Some investors still aren’t familiar with this convergence, but it’s important and it’s one that could be enhanced by the evolution of AI.
YUMY’s pertinence here is simple. Global demand for food is constant and growing due to population growth. The more efficiently farmers can leverage technology, including AI, the more they can boost crop yields. That can create higher profits, reduce hunger and potentially have positive environmental implications. Speaking of implications, they’re compelling when it comes to the intersection of farming and AI.
“Farmers’ dependency on AI and robotics will increase monumentally as the number of mouths to feed on the planet is estimated to increase to 10 billion by 2050. Additionally, global warming and climatic disruptions will force unprepared farmers to exit the business,” according to VanEck research.
ARK Genomic Revolution ETF (ARKG)
Outside of technology, healthcare is one of the most, if not the most, innovative sectors. The ARK Genomic Revolution ETF (ARKG) is one of the ETFs that embodies that spirit and it’s highly relevant in this conversation because AI has myriad healthcare applications. Plus, AI is just scratching the surface of how it can enhance healthcare.
“When it comes to the healthcare sector, it’s still early but we believe artificial intelligence and machine learning adoption is poised to accelerate significantly,” notes Terence Flynn, Morgan Stanley’s Head of U.S. BioPharma Research. “The biopharma industry specifically is moving to unlock the potential of A.I across multiple areas, including drug discovery, clinical development, manufacturing and physician patient engagement.”
Add to that, AI could be a boon to healthcare pursuits such as precision medicine and improved diagnostics. Over time, that can lead to lower costs and better patient outcomes. What’s not to like about that?
VanEck Retail ETF (RTH)
Retail and e-commerce are fertile territories for the application of AI and that extends beyond the use of industrial robots to move and stack product. Enter the VanEck Retail ETF (RTH). While RTH holds just 25 stocks, it’s pertinent here because it’s lineup mixes online titans such as Amazon (AMZN) and large-scale brick-and-mortar retailers – both of which can benefit from AI.
“AI has played a pivotal role in empowering these organizations to effectively meet and exceed their customers’ evolving needs and expectations. The product recommendations on your Amazon account are nothing but an application of complex AI algorithms to determine which products you are more likely to buy,” according to LeewayHertz.
Amazon accounts for 20.43% of the RTH roster while Dow components Home Depot (HD) and Walmart (WMT) combine for over 17%.
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