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Follow individual equities long enough and investors are apt to become familiar with at least a handful of sell-side analysts. That’s particularly in the mega-cap growth universe where some analysts become almost synonymous with the stocks they track.
Devotees of the magnificent seven and other high-octane artificial intelligence stocks are likely familiar with Wedbush analyst Dan Ives. Ives is well-regarded within the investment community and his AI acumen is now available in basket form to market participants of all stripes thanks to the Wednesday debut of the Dan IVES Wedbush AI Revolution ETF (IVES), courtesy of Wedbush Fund Advisers.
The rookie ETF “targets companies driving AI’s infrastructure and deployment across semiconductors, hyperscalers, cybersecurity, consumer platforms, robotics, and cloud infrastructure. These companies form the backbone of a multi trillion-dollar investment cycle transforming global industries and accelerating enterprise and consumer adoption,” according to a press release.
IVES, Wedbush’s first ETF, follows the Solactive Wedbush Artificial Intelligence Index and charges 0.75% per year, or $75 on a $10,000 position. The fund holds 30 stocks, known as the Ives AI 30, which the analyst views as drivers of the AI revolution.
Investigating IVES
IVES comes to market at a time when it’s increasingly difficult for new ETFs to gain traction among advisors and investors and enters into an arena that’s populated by established competitors. Translation: IVES needs to do something unique to catch market participants’ attention and it does.
For example, sector and even some market ETFs with AI exposure are heavily concentrated in a small number of stocks, many of which aren’t IVES components. Second, IVES addresses the issue of concentration risk to some extent because none of its components exceed a weight of 5.69%. Overall, IVES features a deeper rich into the six primary AI niches than do some competing strategies.
(Image Courtesy: Wedbush)
IVES “covers the full spectrum of industries powering the AI economy — from infrastructure to implementation,” adds Wedbush. “(It) targets companies with both established momentum and long-term potential to lead in enterprise and consumer AI adoption.”
IVES Emphasizes the Right AI Segments
As noted in the image above, there are six areas of emphasis in the AI space, but to date, it’s broadly been enablers – namely semiconductor makers – and hyperscalers delivering the most impressive returns. Some of the hyperscalers, such as Facebook parent Meta (NASDAQ: META), dwell in two territories.
“So, who is leading this AI Revolution? We believe that Microsoft is currently in the driver’s seat on the AI front while AMZN, META and GOOGL closely following behind the curve as MSFT was a first mover following its $10 billion investment into OpenAI in January 2023,” said Ives in May research report.
The quartet of stocks referenced there combine for approximately 19% of the new ETF’s roster and are all top 10 holdings in the fund as are three of the semiconductor names featured in the image. Point is IVES, the ETF, touches a lot of bases.
That’s a good thing, particularly at a time when hyperscalers aren’t backing off AI spending commitments and as industry-level use cases for AI are expanding at a rapid pace.
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