Roundhill Investments is launching today the first exchange-traded fund focused on companies developing generative artificial intelligence technologies. The product is named the Generative AI & Technology ETF (CHAT).
Generative AI systems can create entirely new data and content through complex algorithms that learn patterns in large datasets. Roundhill estimates that the total market for generative AI enterprise software may reach $120 billion. Meanwhile, Goldman Sachs research suggests that AI could generate $7 trillion in economic growth over the next seven years through accelerated productivity.
Dave Mazza, Chief Strategy Officer at Roundhill, said “Generative AI represents the next frontier of AI, with the potential to revolutionize industries. CHAT provides exposure to this rapidly evolving field.”
Generative AI is already having real-world impact. OpenAI’s ChatGPT conversational AI assistant reached 100 million users within two months of launching, faster than any app besides TikTok. Customers use it for creative writing, coding software, and more.
Here’s What the CHAT ETF Invests In
The CHAT ETF consists of globally listed companies across multiple classifications including platforms developing large language models (LLMs), infrastructure providers supplying hardware and semiconductors optimized for AI, and enterprise software providers commercializing generative AI applications for businesses and consumers.
CHAT’s top holdings include Nvidia (7.8%), Microsoft (7.6%), Alphabet (7.2%), Baidu (5.4%), iFLYTEK (5.0%), Adobe (4.9%), AMD (4.9%), SenseTime Group (4.7%), C3.ai (4.5%) and Salesforce (3.6%). Meanwhile, CHAT has an expense ratio of 0.75%.
Mazza said “We heard for months from investors seeking exposure to generative AI, but frustrated by few options. Roundhill is excited to meet that market demand with CHAT, comprised of pioneering companies.”
Generative AI has the potential to radically disrupt and transform multiple industries and the world as we know it. The technology allows machines to create entirely new content and data based on patterns learned from existing datasets.
AI companies like OpenAI, Anthropic, and Alphabet (GOOG) are investing heavily in generative AI research and development through initiatives like GPT-4, Dall-E, and Bard. Rising Chinese AI giants like iFlytek and SenseTime are also investing in the development of this technology.
Generative AI Has the Same Disruptive Power as Crypto or the Internet
Generative AI could change several industries like media by automating content creation, healthcare by assisting doctors and surgeons during their consultations and procedures, and big data by scaling up rapidly the capabilities of existing software to process and interpret datasets.
The scale of the impact of AI may be comparable to major technological advances like the Internet which transformed how we access and share information, or cryptocurrencies which are revolutionizing money and value exchange.
That said, as models continue to grow bigger and become more capable at an exponential pace, concerns have been brought up concerning the potential for damaging bias, lack of transparency, and unintended consequences of implementing this technology across multiple business sectors.
Thus far in 2023, multiple tech companies have been ‘right-sizing’ their organizations and have used the economic slowdown to justify their decision to let go of thousands of employees.
However, there is significant evidence that these job cuts have been influenced by the impact that generative AI is having on their internal processes. For example, engineers are heavily relying on these models to create rough drafts for extensive codes that took them days to come up with before the arrival of solutions like ChatGPT.
In addition, marketing jobs related to content creation and platform management are also being simplified by the use of AI as these systems can generate everything that is needed to create a campaign in minutes.
Governments have been pushing forward several initiatives to regulate the extent to which AI companies can tap into consumers’ data so they don’t – intentionally or unintendedly – violate their privacy.
In any case, AI seems to be the next step in mankind’s evolutionary path and Roundhill’s ETF is allowing investors to expose their money to the stocks that seem more inclined to benefit from this technological advancement.
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