Investors flocked to an exchange-traded fund that tracks stocks related to artificial intelligence on November 24, as reported by Reuters. This surge followed six weeks of consecutive outflows, driven by the robust quarterly performance of chipmaker Nvidia and a growing optimism that U.S. interest rates have peaked.
The Global X Robotics & Artificial Intelligence ETF (BOTZ) experienced a significant uptick in investor interest, with Lipper data indicating a notable $35.5 million in gross flows for the week ending on Wednesday, marking its highest inflow since June earlier this year.
The initial success of ChatGPT had propelled AI-related ETFs to a strong start at the beginning of the year. However, the momentum waned post-June amid concerns about the impact of persistently high U.S. interest rates on the valuations of technology companies.
Investors pivoted towards undervalued Treasuries in anticipation of a potential shift by the Federal Reserve towards interest rate cuts in the upcoming year. This move led to a decline in Treasury yields and a boost for rate-sensitive engineering and development firms.
Tejas Dessai, AVP and Research Analyst at Global X, highlighted that positive business sentiment persisted in November, buoyed by improved inflation metrics and the anticipated rate cuts in the second quarter of 2024. This environment has drawn increased attention from buyers.
The transition of Generative AI from research to practical applications and marketing has paved the way for tangible revenue and profit opportunities, signaling a significant shift in the industry landscape.
The Global X fund has seen a notable 27.7% increase year-to-date, with its performance bolstered by the remarkable 233% surge in the shares of its top holding, Nvidia (NVDA). Nvidia’s GPUs are instrumental in driving the AI market forward.
Aniket Ullal, Head of ETF data and analytics at CFRA, emphasized that Nvidia’s strong financial results, announced on Tuesday, significantly influenced public perception of AI-ETFs. Following Nvidia’s optimistic earnings forecast exceeding Wall Street expectations amid easing supply chain challenges, the fund experienced its highest level of regular inflows in over two months.
The Global X fund, boasting total net assets of \(2.2 billion this year, recorded substantial net inflows amounting to \)554.8 million, reflecting the growing investor confidence in the AI sector.
