Artificial intelligence (AI) stocks have spent the early part of 2026 watching their momentum cool off a bit. They collectively lost about 10% in a brief November sell-off, and they've been hovering back near recent highs ever since.
While worries about valuations will probably dog this sector for a while, there's little question about the potential for AI. We're still in the very early innings of the AI boom, and we're likely to see this sector grow many times over within the next several years.
Over a dozen different exchange-traded funds (ETFs) have emerged to target artificial intelligence stocks and/or quantum computing themes. While many of them seem similar on the surface, you always need to dig into the details to really determine which ones are the best.
In my opinion, the Global X Artificial Intelligence & Technology ETF (AIQ 2.34%) does one of the better jobs of portfolio construction and is able to benefit from current macro tailwinds.
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What is the Global X Artificial Intelligence & Technology ETF?
This fund invests in companies throughout the AI ecosystem. It "seeks to invest in companies that potentially stand to benefit from the further development and utilization of artificial intelligence (AI) technology in their products and services, as well as in companies that provide hardware facilitating the use of AI for the analysis of big data."
NASDAQ: AIQ
Key Data Points
While the final portfolio tilts heavily toward the U.S. tech sector, I appreciate that it has meaningful allocations outside of this core segment. About 28% of the fund is in nontech companies, and a full third is invested in foreign companies. That means that if there's a rotation away from the megacap names, this ETF still has the ability to generate outperformance from other areas of the portfolio.
Why the time is right for this ETF
There are a couple of reasons I think the stocks in this fund are set to rise.
1. Lower interest rates are possible
While lower interest rates are not guaranteed in 2026, the market is pricing in two cuts. If inflation remains stable and the economy can maintain a slow growth trajectory, these cuts can still happen. Lower rates would help this growth sector continue to expand and improve financials in the process.
2. AI capital expenditure is broadening
The initial wave of AI spending was done by the megacaps. For most of them, that spend translated into positive revenue and earnings growth, fueling stock price outperformance.
Now, AI capital expenditure (capex) is increasing (Meta Platforms' recent capex guidance is a good example), and it's happening in different parts of the ecosystem. If we see benefits begin spreading out beyond just the biggest names, this fund's portfolio, which is more evenly balanced and broadly diversified, should do well.
Overall, I like that the Global X ETF doesn't overweight the "Magnificent Seven" stocks. Its willingness to invest a good chunk of its assets internationally yet maintain its large-cap tilt suggests that it's focusing on a broad range of global leaders, not just a narrow set of giant U.S. companies. As the AI boom continues to grow, this section of the industry should be positioned to do well.
