Nvidia’s dizzying rally spurs rush into AI-themed Exchange Traded Funds

AI-themed ETFs surge in popularity as investors seek exposure to transformative technology, with Nvidia leading the charge.

The fervour around artificial intelligence has sparked a gold rush into AI-themed ETFs, as investors seek fresh ways to play the burgeoning technology following breathtaking rallies in market darlings such as Nvidia .

The funds run the gamut from those offering a bouquet of the biggest AI winners to more esoteric themes such as robotics and sound generation. All told, the universe of AI-themed ETFs traded in the United States has soared to $6.88 billion as of the end of February from $2.55 billion a year earlier, Morningstar data showed.

“It’s still so early in the evolution of this category ... that investors are still sorting through the possibilities,” said Will Rhind, founder and CEO of GraniteShares.

The exuberance surrounding AI funds echoes previous waves of investor excitement for other technologies viewed as transformative, from dotcom stocks to electric vehicles.

Each wave introduced major new businesses to the economy and generated astonishing wealth for founders like Jeff Bezos and Elon Musk as well as ordinary investors. At the same time, many of the companies whose shares soared in previous market booms eventually saw their stock prices fizzle, a fate that may await some of the market’s current AI favourites.

For now, investors are responding with enthusiasm and Nvidia — whose chips are seen as the gold standard in AI — continues to grab the spotlight.

The assets of the GraniteShares 2x Long NVDA Daily ETF , which seeks to deliver twice the daily return of the chipmaker’s shares and is not included in Morningstar’s data on AI-themed funds, doubled to $2 billion earlier this month. Those flows have followed the nearly 80% climb in Nvidia’s shares so far this year, after the company’s shares tripled in the year 2023.