Many investors are optimistic about the outlook for artificial intelligence (AI) stocks in 2026, with nine in 10 respondents to a recent Motley Fool survey indicating that they plan to maintain or increase their exposure to AI-related equities this year.
That optimism is warranted. In terms of AI execution and preparedness, the top 10 stocks in Motley Fool's Moneyball database generated an average return over the past five years that was more than double that of the S&P 500. Past performance doesn't guarantee future results, but those past performances are among the reasons why market participants are bullish on AI. That positivity will likely also affect exchange-traded funds (ETFs) that focus on artificial intelligence companies.
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AI ETFs are advantageous options for investors because they provide easy access to baskets of stocks, eliminating the need for people to attempt to predict which specific companies will be the biggest winners. However, there's more to consider when evaluating AI ETFs and those funds' roles in your portfolio this year.
With AI ETFs, purity is pertinent
There are dozens of ETFs with AI ties, but investors should note that there are meaningful differences between AI adjacency and purity. For example, sector ETFs such as the Vanguard Information Technology ETF (VGT 1.47%) and the Fidelity MSCI Information Technology ETF (FTEC 1.59%) are broader plays on technology, but have AI connections by way of their large weightings in stocks like Nvidia and Microsoft.
On the other hand, pure-play AI ETFs have qualifiers to ensure a degree of purity. For example, the Global X Artificial Intelligence & Technology ETF (AIQ 2.34%), the largest ETF in the category, mandates that its components be "positioned to benefit from the further development and utilization of AI in their products and services," or AI hardware providers.
NASDAQ: AIQ
Key Data Points
The First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT 1.65%) employs a different approach. It focuses on AI enablers, engagers, and enhancers. Enablers are the companies that provide foundational components for AI and robotics development. In contrast, engagers create products for end use, such as industrial robots or AI software. This AI ETF defines enhancers as corporations that provide "value-added services" in the AI and robotics industries, outside of their core product suites.
The point is, investors should be mindful of the fact that simply because an ETF has "AI" in its name, that doesn't mean its holdings will be comparable to another fund with a similar title.
Weighting methodology matters
Investors should also assess how these funds weight their components. For standard tech sector ETFs and some of the largest dedicated semiconductor ETFs, the most common weighting scheme is by market capitalization, meaning that companies that are worth the most command the largest percentages of their portfolios.
There's nothing inherently wrong with market-cap weighting, as it harnesses the market's collective wisdom. However, it does introduce some risk with AI ETFs because it reflects price action that has already occurred. It may not be responsive enough at a time when market participants are hoping to gain exposure to the next batch of AI winners, including those leading the charge on still-evolving fronts such as agentic AI.
Fortunately, investors don't have to look far to find AI ETFs that are more diversified in their holdings. The First Trust Nasdaq Artificial Intelligence and Robotics ETF doesn't allocate more than 2.04% of its weight to any of its 110 holdings when it rebalances, while the WisdomTree Artificial Intelligence and Innovation Fund (WTAI 2.82%) holds 59 stocks, and as of Dec. 31, its largest holding only had a weight of 5.58%. Conversely, just three stocks command more than 43% of the value in the Vanguard Information Technology ETF.
