Companies are already deploying capital to meet this new mandate. Amazon Web Services (AWS) recently committed up to $50 billion to expand data center infrastructure specifically for U.S. government customers. This significant expenditure suggests the next phase of AI growth will be driven increasingly by federal defense and intelligence budgets. For the past year, the artificial intelligence (AI) narrative has centered largely on enterprise efficiency and consumer-facing chatbots. However, a distinct shift ...

Core Insights - The article highlights the emerging trend of photonics as a critical component in the infrastructure supporting AI, robotics, and industrial automation, which is gaining attention from investors [1][5] - Photonics technology offers significant efficiency gains by using light to transmit data, reducing energy consumption and heat generation compared to traditional copper wiring [3][4] Industry Overview - Traditional data centers face limitations due to energy waste and heat generation from copper wiring, which is a significant challenge for power-intensive applications like AI [2] - The shift to photonics, utilizing optical interconnects and fiber optics, allows data to be transmitted at the speed of light with minimal energy loss, enhancing performance per watt [3] Investment Opportunities - The article presents a "picks and shovels" investment strategy, focusing on hardware companies essential for AI and automation, such as Lumentum, Jenoptik, and Coherent, which have reported strong earnings [4] - ETFs like ROBO and THNQ provide diversified exposure to companies involved in the photonics infrastructure, which is crucial for the future of AI and robotics [5][7]

Core Insights - AI has been a significant driver for market performance in 2025, influencing both investors and the stock market broadly [1] - The ROBO Global Artificial Intelligence ETF (THNQ) launched in 2020, tracking an index of global firms involved in AI technology and infrastructure [1][2] - THNQ has seen over $80 million in inflows year-to-date (YTD) and surpassed $300 million in assets as of October, with a YTD return of 39% [2] Fund Performance - The THNQ ETF has outperformed its category average over the last one- and three-year periods, as well as the last three months [2] - The fund focuses on two key areas of the AI ecosystem: infrastructure and applications/services, with infrastructure providing core technology and applications driving revenue growth [2] Investment Outlook - THNQ is positioned to offer exposure to artificial intelligence, which remains a key narrative for equities in 2025 [2] - Falling interest rates could further enhance the attractiveness of AI investments entering 2026, making THNQ a strong candidate for satellite equity allocation [2]

Core Insights - The AI industry is projected to grow from $279.2 billion in 2024 to $3.5 trillion by 2032, representing a compound annual growth rate of 31.5% [1] AI ETFs - AI-themed ETFs focus on companies directly involved in AI development or usage, with the ROBO Global Artificial Intelligence ETF (THNQ) being a notable example [4][5] - The THNQ ETF includes 52 stocks, with top holdings such as Nebius Group, Advanced Micro Devices, and Alibaba Group, each with a maximum weighting of 3.3% [7] - The THNQ ETF has an expense ratio of 0.75% and has outperformed the market with a 44% increase over the past year [8] Broad Tech ETFs - The Vanguard Information Technology ETF (VGT) offers broader tech exposure while still having significant AI investments, making it suitable for investors cautious about potential AI stock bubbles [9] - The VGT ETF holds 314 stocks, with a 31% weighting in semiconductor stocks and top holdings including Nvidia, Apple, and Microsoft, which collectively account for 43.6% of the fund [12] - The VGT ETF has a low expense ratio of 0.09% and has increased by 29% in the last year [12] AI-Run ETFs - The AI Powered Equity ETF (AIEQ) utilizes IBM Watson to select stocks, providing a unique approach to AI investment [13] - The AIEQ fund has 38.5% of its holdings in information technology, with top stocks including Nvidia, Microsoft, and Apple, which together represent 32.7% of the fund [14] - The AIEQ ETF has an expense ratio of 0.75% and has gained 20.6% over the past year, which is the lowest performance among the ETFs discussed [15] Investment Strategy - AI ETFs present an accessible way for investors to capitalize on AI growth without the need to select individual stocks, offering various options from AI-themed to broader tech ETFs [16]

Group 1 - TMX VettaFi participates in a weekly podcast discussing new and trending ETFs, emphasizing the importance of understanding how a new ETF fits into a broader portfolio [1] - The three largest U.S. listed ETFs tracking the S&P 500 collectively manage $2 trillion in assets, while the Invesco QQQ Trust and Invesco NASDAQ 100 ETF manage over $400 billion [2] - The Vanguard FTSE Developed Markets ETF and iShares Core MSCI EAFE ETF are among the largest internationally focused ETFs, managing more than $325 billion [3] Group 2 - The MFS Active International ETF, launched in late 2024, has gained popularity and now manages $430 million, with 22% of its assets in emerging markets [5] - AI thematic ETFs have gained traction, with major U.S. companies investing heavily in AI, and stocks like Apple and Microsoft being heavily owned by QQQ and QQQM [6] - The ROBO Global Artificial Intelligence ETF has a limited 21% overlap with Nasdaq 100 ETFs, indicating diverse holdings in the AI sector [7]

Core Insights - AI investing has significantly driven portfolio performance, particularly benefiting major tech firms, but true AI investment requires more than just investing in these firms [1] - The emergence of physical AI applications, particularly in robotics, presents a larger investment opportunity beyond traditional data center investments [2] Group 1: AI and Robotics - NVIDIA's recent earnings call highlighted the growth of its robotics platform, indicating that robotics will be a long-term demand driver for its data center business due to higher computational needs [3] - CEO Jensen Huang emphasized that AI and robotics represent multitrillion-dollar growth opportunities for NVIDIA [4] Group 2: Supporting Ecosystem - A broader ecosystem of tech enablers, including companies like Taiwan Semiconductor, AMD, and Qualcomm, is capitalizing on AI opportunities across various sectors [4] - THNQ ETF includes companies such as Cloudflare, Snowflake, MongoDB, and Elastic, which operate in Network & Security, Big Data Analytics, and Cloud Providers segments [4] Group 3: THNQ ETF Performance - THNQ ETF has returned 18.9% year-to-date, outperforming both its category and segment averages of 14% and 14.8% respectively [8] - THNQ charges a 68 basis point fee and tracks an index that includes firms generating significant revenue from AI, categorized into infrastructure and application sectors [7] Group 4: Notable Acquisitions - Palo Alto Networks has proposed acquiring Cyberark for $25 billion, enhancing its security offerings across network, cloud, and endpoint security [5] - This acquisition positions Palo Alto Networks to provide a comprehensive security platform for a future with billions of connected devices [6]