“If you take a look at the proportion of IT spend from all companies going into AI, it’s nonetheless tiny. The spend that’s going to AI has been projected to be round two per cent of whole IT spend for 2024,” Hofstra says. “As a lot as [AI] has grabbed headlines partly due to issues like Chat GPT, it’s really nonetheless such a small a part of the general tech spend. So we see AI as having lengthy legs.”
Hofstra’s view on AI impacts is multi-sectoral. service companies like name centres, for instance, he sees AI driving effectivity and expediting service supply. Healthcare, too, is a sector the place AI purposes look like limitless, from gathering and analyzing knowledge, to serving to sufferers and docs handle major care.
In the meanwhile, the brand new CI ETF goals to seize AI tailwinds largely by exposures to publicly traded tech and communications firms. These sectors are presently the massive spenders on AI infrastructure, those constructing out the compute energy, communication linkages, and storage necessities which are wanted for the widespread adoption and implementation of AI. These embrace the ‘huge 4’ AI-exposed megacap tech firms: Nvidia, Amazon, Meta, and Microsoft who’re the biggest spenders on AI proper now.
Hofstra makes use of that spending to distinction this AI development with the dot com bubble of the Nineteen Nineties. The place that period was an investor pushed bubble that paid little consideration to underlying firm fundamentals, these ‘huge 4’ names not less than are spending billions to construct and increase their AI infrastructure.
The ETF isn’t just a mega-cap publicity play, nonetheless. Hofstra affords two names as examples of lesser-known AI-exposed shares: Gitlab, which makes use of AI to assist builders write code, and Supermicro, which develops servers and computer systems which are key underpinnings in AI infrastructure. Different subsectors like knowledge middle REITs seem to supply some further publicity to AI and whereas the brand new ETF presently doesn’t maintain any REITs, Hofstra says the managers are each REITs and utilities firms which can be positively uncovered to the facility demand that AI will place on current and new infrastructure. As a result of the ETF is actively managed, Hofstra and his group are on the lookout for these further alternatives and ought to be prepared to maneuver on them as they come up.