The artificial intelligence revolution is reshaping industries at an unprecedented pace, making it difficult for even seasoned investors to pick future champions. AI-focused Exchange Traded Funds (ETFs) like the Roundhill Generative AI and Technology ETF (CHAT) and the iShares Future AI & Tech ETF (ARTY) offer a compelling solution, providing diversified exposure to the sector’s heavyweights and innovators, allowing investors to capitalize on this transformative trend while spreading risk across a basket of promising stocks.
The dawn of the artificial intelligence (AI) era echoes the early days of the internet boom, presenting both immense opportunity and significant challenges. While technological revolutions promise astronomical returns, history shows that identifying the enduring winners amidst countless contenders can be a near-impossible task. For every Amazon, there are dozens of companies that failed to adapt or simply vanished.
In this dynamic landscape, AI-focused Exchange Traded Funds (ETFs) are emerging as a pragmatic strategy for investors seeking to capture the sector’s explosive growth without the high stakes of individual stock picking. These funds bundle shares of numerous AI-centric companies, offering diversification that can cushion against the volatility inherent in a nascent, yet rapidly expanding, industry.
The Unprecedented Rise of Artificial Intelligence
Artificial intelligence is not just a buzzword; it’s a foundational shift driving market valuations to new heights. The global AI market, valued at an estimated $197 billion in 2023, is projected to surge to an astounding $1.8 trillion by 2030, boasting a compound annual growth rate (CAGR) of 37%, according to Grand View Research. This explosive growth is fueled by continuous innovation, particularly in generative AI, exemplified by OpenAI’s ChatGPT, which amassed over 300 million weekly active users within approximately two years of its late 2022 launch.
At the heart of this revolution are companies like Nvidia, whose graphics processing units (GPUs) are the bedrock for AI development. Nvidia’s market capitalization exploded from $360 billion at the start of 2023 to $4.6 trillion in less than three years, making it the world’s largest company and a testament to the profound value creation driven by AI hardware. This remarkable ascent highlights the intensity of the AI gold rush, where demand for advanced computing power continues to outstrip supply.
Roundhill Generative AI and Technology ETF (CHAT): A Focused Play
For investors keen on directly tapping into the generative AI wave, the Roundhill Generative AI and Technology ETF (NYSEMKT: CHAT) presents a compelling option. Launched in May 2023, this actively managed ETF invests exclusively in companies at the forefront of the AI revolution, focusing on platforms, infrastructure, and software.
As of October 12, 2025, CHAT holds a concentrated portfolio of just 43 stocks, with its top five positions accounting for 25.1% of its total value. These heavyweights include:
- Nvidia: 7.90%
- Alphabet: 5.40%
- Oracle: 4.32%
- Microsoft: 3.80%
- Meta Platforms: 3.72%
Many of these top holdings, such as Alphabet, Oracle, Microsoft, and Meta Platforms, are not only developing their own AI models and software but also serve as major customers for Nvidia’s cutting-edge GPUs. The fund also provides exposure to other pivotal AI players like Broadcom (custom AI chips, networking equipment), Advanced Micro Devices (Nvidia competitor in AI GPUs), Amazon (deploying AI across e-commerce and cloud computing), Palantir Technologies (data analytics software), and Micron Technology (high-bandwidth memory for AI GPUs).
The performance of CHAT has been remarkable, soaring by 52% year-to-date in 2025 and quadrupling the return of the S&P 500. Since its inception in May 2023, the ETF has delivered a whopping 141% return, comfortably outperforming the S&P 500’s 56% gain over the same period. Its active management strategy, which allows the Roundhill team to dynamically adjust holdings, has been a key driver of this outperformance. However, active management comes with a higher expense ratio of 0.75%, which is notably more than passive index funds like the Vanguard S&P 500 ETF (0.03%). While its strong performance currently offsets this cost, it’s a factor investors should consider for long-term returns.
iShares Future AI & Tech ETF (ARTY): Broadening Your AI Horizon
Another compelling option for AI exposure is the iShares Future AI & Tech ETF (NYSEMKT: ARTY). Originally established in 2018, ARTY underwent a significant restructuring in August 2024 to sharpen its focus on companies at the forefront of the AI revolution. This ETF aims to track companies involved in generative AI, AI infrastructure, AI software, and AI services.
ARTY holds 46 stocks, with its top 10 positions representing a substantial 40.8% of its total portfolio as of September 27, 2024. Its concentration in semiconductor stocks reflects the current drivers of AI value creation:
- Advanced Micro Devices: 5.89%
- Broadcom: 5.86%
- Nvidia: 5.58%
- Super Micro Computer: 5.06%
- Intel: 3.32%
- Meta Platforms: 3.18%
- CrowdStrike: 3.08%
- Arista Networks: 3.02%
- Alphabet Class A: 2.98%
- Palantir: 2.88%
Beyond hardware, ARTY also provides diverse exposure to AI software leaders like Meta Platforms (known for its Llama open-source LLM), CrowdStrike (AI-powered cybersecurity), and cloud computing giants like Microsoft and Amazon. With an expense ratio of 0.47%, ARTY is positioned as a moderately priced option for specialized AI exposure.
While ARTY’s current structure is relatively new, its focus on key segments of the AI value chain and diversified holdings beyond just chipmakers make it an attractive vehicle for long-term growth. The fund’s performance, as of October 23, 2024, showed a 1-year return of 20.6%, with assets under management totaling $614.1 million. This diverse portfolio aims to capitalize on both the foundational hardware and the expansive software applications driving AI forward.
Comparing CHAT and ARTY: Strategic Investment Choices
Both CHAT and ARTY offer compelling pathways into the AI investment sphere, but they cater to slightly different strategic preferences. CHAT, with its active management and slightly higher expense ratio (0.75%), has demonstrated aggressive growth and a more concentrated focus on generative AI’s core enablers. Its rapid outperformance since inception highlights the potential rewards of a high-conviction, actively managed approach in a fast-moving sector. A Reuters report on Nvidia’s meteoric rise underscores the kind of individual stock performance these funds aim to harness through diversification.
ARTY, on the other hand, offers a slightly broader AI & Tech focus at a lower expense ratio (0.47%), providing exposure to generative AI alongside AI data & infrastructure, software, and services. Its recent restructuring signifies an adaptive strategy to stay current with the evolving AI landscape. While its historical performance in its current form is shorter, its diversified top holdings across semiconductor and software giants offer a balanced approach to the sector.
For investors seeking maximum exposure to the pure-play generative AI leaders with a willingness to pay for active management, CHAT could be an excellent fit. For those preferring a broader, more cost-effective entry into the multifaceted AI and tech ecosystem, ARTY provides a robust alternative. Neither ETF is designed to be a complete portfolio on its own but serves as an ideal component to add targeted AI exposure to an already diversified investment strategy.
The Long-Term Play in AI ETFs
The artificial intelligence revolution is still in its early stages, promising decades of transformative innovation and economic growth. While the path ahead will undoubtedly be marked by volatility and unforeseen shifts, AI-focused ETFs provide a powerful tool for investors to navigate this complex landscape. By spreading investments across a basket of companies driving the AI revolution, these funds offer a balanced approach to capitalize on the sector’s immense potential while mitigating the risks associated with betting on individual stocks.
As the AI industry matures, the ability to adapt and hold a diversified portfolio of key players—from chip manufacturers to software developers—will be paramount. ETFs like Roundhill CHAT and iShares ARTY are well-positioned to help long-term investors capture the ongoing AI gold rush, making them valuable considerations for any forward-looking portfolio.
