Top Investment Bank Unveils 3 ETFs, 10 Stocks To Buy In The AI Boom

Analysts at Bank of America say that artificial intelligence (AI) has the potential to unleash extraordinary productivity growth, similar to the impact of computers in the 1990s and the post-WWII energy revolution.

In its latest “Research Investment Committee (RIC) report,” BofA names three ETFs to invest in if AI proves to be a disruptive technology, as well as 10 single stocks to buy if AI only moderately increases productivity.

According to a recent PwC study, artificial intelligence could benefit the world economy by up to $15.7 trillion by 2030, while IDC predicts the global AI market will reach $900 billion by 2026.

Productivity growth is crucial for improving living standards, Bank of America said. The most recent substantial rise in productivity occurred in the late 1990s, when computers permeated the economy, resulting in an average annual productivity growth of 3.2% from 1996 to 2004.

3 AI ETFs To Own If AI Is Transformative

Investors who believe that AI will spark an economy-wide productivity boom should consider owning AI ETFs because “it’s hard to pick the ultimate winners and losers of a technological revolution,” Bank of America analysts said in a Tuesday note.

AI thematic ETFs are more diversified in terms of both sectors and countries than basic tech and semiconductor funds while providing liquid access.

1. Global X Artificial Intelligence & Technology ETF AIQ
   – Description: AIQ Invests in AI companies driving innovation and growth and offers a diversified exposure to AI, machine learning and robotics.
   – Performance year-to-date: 42.3%
   – 12m consensus forward P/E: 26x
   – Top holdings: Nvidia Corp. NVDA (5.3%), Meta Platforms Inc. META (5%), Tesla Inc. TSLA (4.5%)
   
2. Global X Robotics & Artificial Intelligence ETF BOTZ
   – Description: BOTZ targets companies involved in the robotics and automation industry, including manufacturers, developers, and users of robotics and automation technology. It offers a diversified exposure to sectors, such as industrial manufacturing, healthcare, artificial intelligence and autonomous vehicles.
   – Performance year-to-date: 41.7%
   – 12m consensus forward P/E: 42x
   – Top holdings: Nvidia (12%), Intuitive Surgical Inc. ISRG (9.9%), ABB Ltd. ABBNY (0.3%).
   
3. iShares US Tech Breakthrough Multisector ETF TECB
   – Description: TECB seeks to invest in a diversified portfolio of companies involved in various sectors, such as semiconductors, cloud computing, artificial intelligence, cybersecurity and e-commerce.
   – Performance year-to-date: 40.6%
   – 12m consensus forward P/E: 32x
   – Top holdings: Meta Platforms Inc. (4.2%), Nvidia (4.1%), Apple Inc. AAPL (4%)

10 AI Stocks To Buy If AI Improves Productivity Only Marginally

Most tech innovations, while profitable, often provide only marginal improvements in productivity.

A structural change toward greater inflation and interest rates could stymie the spread of AI. “More Fed hikes and an environment with higher rates for longer present material risks for continued outperformance of tech,” Bank of America said.

Investors who have doubts about the transformative potential of AI should focus on companies that are successfully leveraging AI technology to enhance their business models, the analysts said.

Bank of America screened 10 stocks outside the hardware and software industries that have outperformed the S&P 500 over the last decade.

Name	Annualized return (last 10 years)	How It Uses AI
UnitedHealth Group UNH	24%	Utilizes AI to collect patient data and offer customized solutions through its subsidiary, Optim.
Evotec SE EVO	21%	Holds a minority stake in Exscienctia, focused on AI-driven drug discovery and design.
LPL Financial LPLA	21%	Offers “Advisor Sleeve” AI/ML technology for stress testing model portfolios.
Deere & Co DE	20%	Uses AI to track plant growth across varying conditions, aiding farmers with cultivation optimization.
Interactive Brokers IBKR	19%	Capitalise.ai allows traders to automate strategies using user-friendly language without coding requirements.
Humana Inc HUM	19%	Leverages IBM’s conversational AI to enhance benefit communication for Humana Employer Group members.
Equinix Inc EQIX	18%	Possesses a large portfolio of global data centers, providing an advantage in expanding AI applications.
Teledyne Tech. Inc. TDY	18%	Sapera Vision Software by Teledyne offers image processing and AI capabilities for machine vision applications.
Rockwell Automation Inc ROK	16%	Fiix Foresight, an AI-powered suite of tools, analyzes maintenance data to predict breakdowns and improve operational efficiency.
Omnicell Inc. OMCL	13%	Omnicell One is a cloud technology service optimizing medication spend, reducing waste, and improving pharmacy productivity.

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