Key Points
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Artificial intelligence (AI) is generating substantial value for semiconductor, cloud, and cybersecurity companies.
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The iShares A.I. Innovation and Tech Active ETF spreads exposure across the full AI technology stack, holding 49 leading stocks.
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Since its launch less than two years ago, the iShares ETF has returned more than 70%, with further upside potential.
Some exchange‑traded funds (ETFs) hold hundreds or even thousands of individual securities. The iShares A.I. Innovation and Tech Active ETF (NYSEMKT: BAI) focuses on a curated list of 49 companies that are developing and deploying artificial intelligence (AI) technologies.
The fund began trading in October 2024 and has since delivered more than twice the return of the S&P 500 stock market index, driven by strong gains in key holdings such as semiconductor leaders Micron Technology and Nvidia. A single share can be purchased for under $50, making it an attractive option for investors seeking long‑term AI exposure.
Image source: Getty Images.
Investing across the entire AI technology stack
The semiconductor industry sits at the heart of the AI revolution. Specialized chips, known as graphics processing units (GPUs), handle the heavy computational work required for AI training and inference, supported by high‑bandwidth memory (HBM) and advanced networking components. Unsurprisingly, the five largest positions in the iShares A.I. Innovation and Tech Active ETF are all semiconductor stocks.
Company
iShares ETF Portfolio Weight
1. Micron Technology
6.18%
2. Nvidia
5.30%
3. Advanced Micro Devices
4.81%
4. Broadcom
4.65%
5. Taiwan Semiconductor Manufacturing
4.59%
Data source: iShares. Portfolio weightings are accurate as of Aug. 27, 2026, and are subject to change.
The AI boom is creating value beyond hardware providers. The iShares ETF also holds Alphabet, Microsoft, and Amazon, which are among the largest purchasers of AI GPUs and components. Each of these companies operates cloud platforms that rent spare computing power to other businesses seeking to build their own AI solutions. Demand is surging because most enterprises lack the capital to construct such infrastructure independently.
The fund also includes cybersecurity leaders Palo Alto Networks and CrowdStrike, which have integrated AI into their flagship products to automate threat detection, incident response, and other security functions. In addition, they have launched new offerings designed to protect organizations deploying AI, as chatbots, agents, and related applications introduce fresh security risks.
Finally, the iShares A.I. Innovation and Tech Active ETF maintains modest positions in two leading private AI labs, Anthropic and OpenAI, developers of some of the industry’s most advanced foundation models. Because both companies remain private, the ETF provides a rare opportunity for investors to gain exposure to these cutting‑edge AI pioneers.
This ETF could supercharge a diversified portfolio
While the ETF has a short track record—less than two years of trading—it has already generated an impressive return of approximately 76% since its October 2024 launch, far outpacing the S&P 500’s 31% gain over the same period. Although it would be unrealistic to expect such outperformance to persist indefinitely, the AI transformation is still in its early stages. Nvidia has projected that the five largest hyperscalers—including Alphabet, Microsoft, and Amazon—will spend nearly $800 billion on AI infrastructure in 2026, rising to $1.3 trillion in 2027. If those forecasts materialize, most chip‑related stocks are likely to move higher.
Furthermore, Nvidia CEO Jensen Huang has noted that both computing capacity and token generation are now generating substantial profits. This indicates that hyperscalers are beginning to see returns on their capital investments, while AI labs such as Anthropic and OpenAI are also profiting as customers deploy their models. This profitability bodes well for the long‑term sustainability of the AI boom.
Investors should avoid concentrating too heavily in this ETF due to its concentrated nature, but it can serve as a valuable addition to a diversified portfolio that currently lacks significant AI exposure.
Should you buy the iShares A.I. Innovation and Tech Active ETF now?
Before making any investment decision, consider your financial goals, risk tolerance, and the concentration risk inherent in a fund that holds a limited number of stocks.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Broadcom, CrowdStrike, Micron Technology, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
