The Zhitong Finance App learned that in recent times, the craze surrounding artificial intelligence has sparked a gold rush for artificial intelligence-themed ETFs. After an astonishing rebound from market darlings such as NVDA.US (NVDA.US), investors expect to invest in this emerging technology through this new method.

These funds cover a wide range of topics, from the biggest AI investors to more esoteric topics such as robotics and sound generation. According to data from Morningstar, by the end of February, the total amount of artificial intelligence-themed ETFs traded in the US had soared from US$2.55 billion a year ago to US$6.88 billion.

“The development of this category is still in its early stages... investors are still sifting through the possibilities,” said Will Rhyd, founder and CEO of GraniteShares.

The boom surrounding artificial intelligence funds echoes previous investors' excitement about other technologies seen as transformative (from the internet to electric vehicles).

Each wave brings significant new business to the economy and creates amazing wealth for founders such as Bezos and Musk, as well as ordinary investors. However, it is worth noting that many companies whose stock prices soared during previous market booms eventually experienced falling stock prices.

But for now, investors are still reacting enthusiastically, and Nvidia — whose chips are considered the gold standard in the field of artificial intelligence — continues to be the focus of attention.

The assets of the GraniteShares 2x Long NVDA Daily ETF (NVDL.US) doubled to $2 billion earlier this month. The ETF aims to provide a daily return of twice the chipmaker's stock and is not included in Morningstar's data on artificial intelligence-themed funds. Prior to these capital inflows, Nvidia's stock price had risen nearly 80% this year so far, and the company's share price tripled in 2023.

Smaller ETFs are also booming. Taylor Krystkowiak, an investment strategist at Themes Generative Artificial Intelligence ETF (WISE.US), said the ETF's assets tripled from $7.5 million earlier this month to about $20 million.

Of the 18 diversified artificial intelligence-related ETFs tracked by Morningstar, only 7 were launched within the past three years. Only the eighth has been redesigned to target artificial intelligence more directly.

According to Morningstar's data, the total capital inflow of these funds over the past 12 months was US$2.68 billion. This is almost double the amount flowing into global real estate ETFs, the company said.

It is unclear whether investors' excitement about the future of artificial intelligence is fueling the bubble or just driving a strong bull market in the stock market.

Since this year, the S&P 500 has risen nearly 8%, partly due to continued gains from AI beneficiaries such as Nvidia and Microsoft (MSFT.US), which rose 24% last year. Artificial intelligence fervor has also driven the parabolic trend of other companies' stock prices, including ultra-microcomputers (SMCI.US), which were included in the S&P 500 index this week and rose by more than 250%.

After the surge, it appears that some investors are beginning to limit their exposure to Nvidia and other highly volatile stocks. ETF issuer Global X found that its artificial intelligence and technology ETF Global X (AIQ.US) had tripled in size in the past three months, but the ETF limited Nvidia's exposure to 3%.

In contrast, its Robotics and Artificial Intelligence ETF (BOTZ.US) (which invests more than 20% of its assets in this chipmaker) grew 20%.

Others are focused on finding new areas that will benefit from artificial intelligence, said Rene Reyna, head of strategy for Invesco Themed ETFs and Invesco AI and Next Gen Software ETF manager.

“Our conversations with investors are not focused on finding the next Nvidia, but on recognizing that these technologies are changing the market landscape and finding ways to take a share of this growth,” he said.

Morgan Stanley analysts last week published a list of 480 individual stocks likely to benefit from artificial intelligence. Less obvious beneficiaries include Walmart (WMT.US) and Caterpillar (CAT.US). The bank also suggests exploring “less crowded sub-topics” such as the integration of artificial intelligence and smartphones.

On the other hand, ETFs are also scrambling to provide various types of products. While holding Nvidia shares, the Robotics Global Robotics and Automation Index ETF (ROBO.US) also holds shares that are expected to benefit from artificial intelligence technology, such as Intuitive Surgery (ISRG.US). Roundhill Generative AI & Technology ETF (CHAT.US) focuses on companies that are expected to be generative AI beneficiaries, including CRM.US (CRM.US) and MRVL.US (MRVL.US).

Despite this, at least one AI-based ETF failed to win over investors. WisdomTree US AI Enhanced Value ETF (AIVL.US), which uses artificial intelligence to select its portfolio, has outflows of $48.26 million over the past 12 months, falling behind the S&P 500 index.

One possible reason for the poor performance of this fund and other similar funds is that many of these funds lack positions in Nvidia and other AI-related stocks.