Artificial intelligence (AI) stocks have led the overall market rally in recent years. In fact, investors who don’t own a piece of the AI revolution may have underperformed their benchmarks since it started gaining momentum in early 2023. S&P500(SNPINDEX: ^GSPC) index.
Luckily, there’s an easy way to fix that in 2026. Roundhill Generative AI and Technology ETF(NYSEMKT: Chat) It invests exclusively in companies that develop AI infrastructure, AI software, and AI platforms, with more than one-fifth of its assets in Nvidia, alphabet, micron technologyand Amazon Alone.
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Here’s why this exchange-traded fund (ETF) could be a great addition to a diversified portfolio lacking exposure to the AI boom.
Image source: Getty Images.
The Round Hill Generative AI and Technology ETF owns just 43 stocks. It is actively managed by a team of investment professionals who adjust their portfolios based on what they believe will yield the best returns.
This can lead to higher returns compared to passively managed ETFs that simply track an index like the S&P 500, but on the other hand, the AI industry moves so quickly that volatility is a key risk.
Volatility could also be a side effect of the Round Hill ETF’s top-heavy portfolio construction. As we alluded to earlier, the fund invests 20.7% of its assets in four of the top companies in the AI industry, so its performance may be disproportionately influenced by those companies alone.
stock
Round Hill ETF Portfolio Weighting
alphabet
6.92%
Nvidia
6.43%
Amazon
4.01%
micron technology
3.33%
Data source: Roundhill Investments. Portfolio weightings are accurate as of March 1, 2026 and are subject to change.
Fortunately, these four stocks have been outstanding performers since the beginning of 2023, delivering an average three-year return of 559%. For some perspective, the S&P 500 was up just 79%.
Data by YCharts.
These four stocks certainly have the potential to rise further. Nvidia’s new Vera Rubin semiconductor platform for data centers is expected to go into volume production later this year and is expected to significantly reduce the cost of training and servicing AI models. Colette Kress, the company’s chief financial officer, said all major developers are likely to adopt them.
This is also good news for Micron. That’s because the company’s high-bandwidth memory solutions are built into Nvidia’s AI chips to manage seamless data flow for maximum processing speed. In fact, the company’s revenue growth is expected to accelerate going forward due to AI-related demand.
As chips and other hardware components become more efficient, leasing computing power to developers via the cloud also becomes a more profitable business model as costs are significantly reduced. This will be a huge boost for Alphabet and Amazon, as they operate two of the world’s largest cloud platforms.
Other notable AI stocks in the Round Hill ETF include: microsoft, advanced micro device, broadcom, meta platform, Palantir Technologiesand two of Micron’s largest global competitors. SK Hynix and samsung electronics.
Roundhill Generative AI and Technology ETF was founded in May 2023, so it doesn’t have a very long track record. The AI industry has (broadly speaking) experienced little disruption over that period, so we don’t know how well this ETF will weather the storms that may inevitably arrive.
That said, the Round Hill ETF is up 146% since its inception. erase The S&P 500 returned 64% over the same period.
These higher returns come at a cost, as the ETF has an expense ratio of 0.75%. That means a $10,000 investment will cost you about $75 a year in fees. At face value, it doesn’t seem that bad. 25 times more expensive than the expense ratio of Vanguard S&P 500 ETFonly 0.03%. Actively managed funds typically require the undivided attention of a team of experts and are expensive to operate, resulting in higher operating costs.
Investors should not bet their farm on such ETFs given their high costs, high portfolio concentration, and potential volatility. In fact, it could be a great addition to a portfolio of other ETFs or individual stocks that currently lack exposure to the AI boom.
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Anthony Di Pizio has no position in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Micron Technology, Microsoft, Nvidia, Palantir Technologies, and Vanguard S&P 500 ETFs. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Introducing the Artificial Intelligence (AI) ETF with 20% of its portfolio held in Alphabet, Nvidia, Micron, and Amazon was originally published by The Motley Fool.
