There's no denying that artificial intelligence (AI) has been one of the most captivating investment themes of recent years, and that's playing out in terms of returns. Over the past five years, several of the best-performing domestic stocks, a quintet featuring Nvidia (NVDA 0.98%), are AI names.
Various data points confirm the efficacy and intensity of the AI investment thesis. Here's one. From March 2020 through June 2025, capital expenditures by the "Magnificent Seven" surged roughly fivefold. In other words, hyperscalers are putting their money where their mouths are. That trend isn't waning. According to some estimates, AI expenditures could increase by 20% in 2026.
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Combining seemingly undaunted infrastructure spending trends with the widespread belief that AI is still a young technology with much room to evolve, there's a solid foundation for a variety of AI-oriented exchange-traded funds (ETFs). One of my favorites among them is the Roundhill Generative AI & Technology ETF (CHAT 0.57%).
This AI ETF is worth chatting up
It wouldn't be unreasonable to expect this ETF to double, triple, or more over a lengthy holding period. After all, the Roundhill Generative AI & Technology ETF has returned nearly 52% so far this year, making it the second-best performer in the AI ETF group when excluding one 2x leveraged ETF.
Explaining the success of this $1.04 billion ETF isn't difficult. It doesn't take unnecessary risks in its portfolio in search of outlandish returns. If anything, this fund is a "meat and potatoes" play on AI investing. It includes six of the "Magnificent Seven" names. And given that the Roundhill ETF is actively managed, it's possible that the seventh -- Tesla (TSLA +0.03%) -- could be added to the portfolio in the future.
Alphabet and Nvidia combine for more than 13% of the portfolio. As the premier pick-and-shovel name in AI, Nvidia generates plenty of buzz, but Alphabet's status as the fund's largest holding (7.6% of the roster) is meaningful to investors. The successes of the company's Gemini 3 AI model are allaying investors' fears that large language models and chatbots such as ChatGPT may erode the traditional internet search market that Google dominates. Instead, Alphabet has been flexing its AI muscles.
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Key Data Points
Gemini 3's progress is important to Alphabet shareholders and investors considering this AI ETF for another reason. In the early days of the AI investing boom, hope and enthusiasm were enough to fuel share price gains, but that phase is now fading into the rear-view mirror. Investors today want to see tangible progress attached to big AI spending. Alphabet is delivering on that front.
This ETF is surprisingly deep
One of the issues with thematic investing through ETFs is the lack of diversification across a theme's various moving parts. Some AI funds are heavily tilted toward semiconductor stocks and the Magnificent Seven, but not much else.
The Roundhill Generative AI & Technology ETF doesn't commit that sin. Yes, it has significant exposure to six of the Magnificent Seven, but its 40 other holdings tap into other AI segments. For example, Palantir is a leader in the enterprise AI realm, while Nebius is an AI data center player. This ETF is about much more than chips and consumer-facing AI applications.
This ETF's expense ratio is 0.75% per year, equivalent to $75 on a $10,000 investment. That may sound like a pricey management fee compared to what many basic broad market funds charge, but it's well below average for an actively managed thematic ETF.
