First Trust Nasdaq Artificial Intelligence and Robotics ETF

ROBT

Market cap $713M

The First Trust Nasdaq Artificial Intelligence and Robotics ETF is rated a 'Buy' for capturing a structural value shift in AI and robotics. ROBT's equal-weighted, tiered construction reduces concentration risk and offers diversified exposure to international Engagers, Enablers, and Enhancers. The ETF may lag during software- and silicon-led rallies but is positioned for upside as CAPEX transitions to ROI in applied AI and robotics.

AI-powered robotics finally stand ready to deliver reliable, cost-effective solutions that factories, warehouses, and maintenance providers want. The publicly traded companies that stand to benefit from this brewing growth, however, aren't household names that are easy to research and monitor.

Stocks like Nvidia are dominating the market thanks to the AI infrastructure buildout. Investors who want to participate in the development of AI should tread cautiously because bubbles eventually burst.

First Trust Nasdaq Artificial Intelligence and Robotics ETF offers diversified AI/robotics exposure with lower concentration risk than BOTZ and similar performance to ROBO. ROBT's methodology divides holdings into Engagers, Enablers, and Enhancers, resulting in a broad portfolio of ~100 stocks with strong global and sector diversification. Compared to peers, ROBT stands out for its thematic purity, meritocratic weighting, and broader AI coverage beyond traditional robotics, making it a compelling core holding.

Though it's far from a new approach, many exchange-traded funds (ETFs) aiming to provide exposure to the much-hyped artificial intelligence (AI) space tend to lean fairly heavily on a small number of big names. NVIDIA Corp. NASDAQ: NVDA, for example, is the single largest holding of the popular Global X Robotics & Artificial Intelligence ETF NASDAQ: BOTZ fund, representing nearly 12% of the entire portfolio.

I recommend buying ROBT for conservative investors seeking AI growth, as its portfolio, with only 20.5% in the top 10, emphasizes keeping capital intact. ROBT's spread exposure to technology and industrials is optimally positioned to benefit from the $4.8 Tn expansion of the AI industry by 2033, powered by corporate take-up and M&A. With holdings in the form of Upstart Holdings and Meta Platforms, ROBT anchors small-cap ingenuity with large-cap security, shielding against market correction against AIQ's 70% weighting to technology.

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The Nasdaq is down well over 3% as of this writing, with AI hardware names driving the declines. The main AI infrastructure stock, Nvidia, is down roughly 20% over the last two trading days, which equates to a drop of nearly $700 billion in market cap.

After a brief lull, the fervor for artificial intelligence (AI) investments is back with a bang on Wall Street.