This means that an investor putting $10,000 into the ETF would pay $69 in expenses in a year. ![]() Lastly, one final thing to be aware of is that BOTZ has a relatively high expense ratio of 0.69%. Morgan Stanley analyst Joseph Moore recently said that AMD’s opportunity within the AI market may be much larger than initially anticipated. For example, Microsoft is a key investor in privately-held OpenAI, which is perhaps the most prominent name in the space, and Microsoft is surprisingly absent from BOTZ’s holdings.Īnother name that is conspicuous in its absence is semiconductor giant Advanced Micro Devices. However, it also seems like some key names are missing from the fund, in addition to the three stocks mentioned above. I give BOTZ credit for going beyond the usual suspects when it comes to AI, delving deep into international markets to find plenty of under-the-radar names that most generalist investors won’t be familiar with, and there are likely some hidden gems in this mix. None of these leading AI names are held by this fund. The mention of Meta Platforms, Alphabet, and Taiwan Semiconductor brings up another point that investors should be aware of about BOTZ. As you can see, it’s possible to invest in compelling AI plays without paying a huge premium to the broader market. Taiwan Semiconductor, which fabricates the semiconductors that Nvidia and many other chipmakers use for AI applications, trades at just 16.2 times earnings. Look no further than mega-cap tech leaders like Meta Platforms and Alphabet, which are both heavily involved in AI and trade at 20.4 times and 22.2 times earnings, respectively. However, there are plenty of stocks that are heavily involved in AI that trade at a discount to the broader market or at least on par with it. Of course, AI is cutting-edge technology that has the potential to reshape the economy as we know it, so you can certainly make the argument that the broad universe of AI stocks deserves a premium valuation to the overall market. This is significantly more expensive than the S&P 500’s P/E multiple of 23.9. As you might guess, with its top two holdings trading at such lofty valuations, BOTZ itself has a fairly steep valuation, with a weighted average price-to-earnings ratio of about 34.2. This brings us to the second concern when it comes to BOTZ, which is the ETF’s overall valuation. Meanwhile, Intuitive Surgical isn’t much of a bargain either - the maker of robotic surgery equipment trades for 55.8 times earnings and 47.4 times next year’s earnings. Nvidia currently trades at 62.5 times forward earnings, and even going all the way out to January 2025, it trades at 46.3 times consensus 2025 earnings estimates. Also, the market seems to be pricing both Nvidia and ISRG for perfection right now based on their current valuations, meaning that their share price could take a haircut based on any earnings disappointment or other misfire. ![]() To be fair, these are great, innovative companies (with great Smart Scores to boot), but this leaves BOTZ investors with a lot of exposure to these two names, both to the upside and downside. Below, you can check out an overview of BOTZ’s top 10 holdings using TipRanks’ holdings screen. Furthermore, it’s even more concentrated when it comes to its top positions - robotic surgery device maker Intuitive Surgical has a 10% weighting, and semiconductor giant Nvidia has a 9.3% weighting. ![]() However, this ETF’s top 10 holdings make up 65.7% of the fund, so this is a fairly top-heavy portfolio. BOTZ holds just 45 positions - this isn’t a bad thing per se, as BOTZ is a thematic ETF focused specifically on artificial intelligence, so its fund managers want to key in on what it believes are the best opportunities within AI. One thing investors should be aware of is that BOTZ is not particularly diversified. However, there are several reasons for caution that investors may want to consider before jumping into BOTZ near its 52-week high. AI is clearly an exciting sector with enormous long-term potential. As investor interest in artificial intelligence (AI) continues to surge, it comes as no surprise that the Global X Robotics & Artificial Intelligence ETF ( NASDAQ:BOTZ) just hit a 52-week high.
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