Artificial intelligence (AI) stocks have driven a broad market rally over the past few years. In fact, investors who didn’t own a piece of the AI revolution as it began gathering momentum in early 2023 likely underperformed the benchmark. S&P 500(SNPINDEX: ^GSPC) Indicator
Fortunately, there is a simple way to fix it in 2026 Roundhill Generator AI and Technology ETF(NYSEMKT:CHAT) Specifically investing in companies that develop AI infrastructure, AI software, and AI platforms, one-fifth of its assets are parked in it. Nvidia, the alphabet, Micron Technologyand Amazon only
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Here’s why this exchange-traded fund (ETF) could be a great addition to a diversified portfolio that lacks exposure to the AI boom.
Image source: Getty Images.
The Round Hill Generative AI and Technology ETF holds just 43 stocks. It is actively managed by a team of investment professionals who make adjustments to the portfolio based on what they believe will deliver the best returns.
This can lead to higher returns than passively managed ETFs that simply track indexes like the S&P 500, but on the flip side, volatility is a significant risk because the AI industry is moving so fast.
Volatility can also be a side effect of building a top-heavy portfolio of Round Hill ETFs. As I mentioned, the fund has 20.7% of its assets invested in the top four companies in the AI industry alone, so its performance is sometimes disproportionately influenced by them alone:
storage
Roundhill ETF Portfolio Weighting
the alphabet
6.92%
Nvidia
6.43%
Amazon
4.01%
Micron Technology
3.33%
Data source: Roundhill Investments. Portfolio weights are accurate as of March 1, 2026, and are subject to change.
Fortunately, these four stocks have been outstanding performers since the start of 2023, delivering an average return of 559% over the three-year period. For some perspective, the S&P 500 is up just over 79%.
Data by YCharts.
There is certainly a case to be made even higher in these four names. Nvidia’s new Vera Rubin semiconductor platform for the data center is set to enter mass production later this year, and is expected to significantly lower the cost of training and servicing AI models. Colt Chris, the company’s chief financial officer, says any major developer is likely to replace them.
This is also good news for Micron, as its high-bandwidth memory solutions are embedded in Nvidia AI chips, where they manage unprecedented data flows to unlock more processing speed. In fact, company revenue growth is expected to accelerate from here thanks to AI-related demand.
As chips and other hardware components become more efficient, leasing computing capacity to developers via the cloud is also becoming a more viable business model due to much lower costs. Alphabet and Amazon operate two of the world’s largest cloud platforms, so this would be a huge tech windfall for both companies.
The Round Hill ETF includes some of the more popular AI stocks Microsoft, Advanced Micro Devices, Broadcom, Meta platforms, Palantir Technologiesand Micron’s two major global competitors, SK Hynix and Samsung Electronics.
The Round Hill Generative AI and Technology ETF was launched in May 2023, so it doesn’t have a very long track record. The AI industry has experienced very little turbulence (broadly speaking) during this period, so we don’t know how well this ETF will weather a potential storm when one finally arrives.
That said, the Round Hill ETF has gained 146% since its inception. wipe out The S&P 500, which has returned 64% over the same period.
These high returns come at a cost, as the ETF has an expense ratio of 0.75%, meaning a $10,000 investment would cost about $75 in annual fees. It doesn’t seem too bad at face value, but it is 25 times higher Compared to the cost ratio Vanguard S&P 500 ETFwhich is only 0.03%. An actively managed fund is generally more expensive to run because it requires the full attention of a team of professionals, which costs money.
Given its high cost, high portfolio concentration, and potential for volatility, investors should not bet the farm on an ETF like this one. Instead, it can be a great addition to a portfolio of other ETFs and individual stocks that currently lack exposure to the AI boom.
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Anthony DiPizio has no position in any of the listed stocks. The Motley Fool owns and recommends positions in Advanced Micro Devices, Alphabet, Amazon, MetaPlatforms, Micron Technologies, Microsoft, Nvidia, Palantir Technologies, and the Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom. Motley Fool has a disclosure policy.
Meet Artificial Intelligence (AI) ETF With 20% of Its Portfolio Parked in Alphabet, Nvidia, Micron and Amazon Originally Posted by Motley Fool
