As the year 2025 approaches its conclusion, investors are reflecting on their portfolios and considering adjustments in anticipation of the new year. This year has been monumental for the artificial intelligence (AI) sector, with significant contributions from industry leaders like Nvidia and Palantir Technologies, who have collectively outperformed the S&P 500. Recognizing the remarkable growth potential, two exchange-traded funds (ETFs) focused exclusively on AI are catching the attention of savvy investors: the Roundhill Generative AI and Technology ETF and the iShares Future AI and Tech ETF.
The Roundhill Generative AI and Technology ETF stands out due to its concentrated approach, with a portfolio consisting of only 49 stocks. The fund’s top five holdings dominate its value, collectively accounting for 26.7% of the portfolio. Among these, Alphabet leads with a 7.53% weighting, followed closely by Nvidia, Microsoft, Meta Platforms, and Palantir Technologies. These five stocks have delivered an average return of 56% throughout 2025, greatly contributing to the ETF’s remarkable year-to-date gain of 47%, significantly outpacing the S&P 500’s 17% increase.
Underpinning Alphabet’s success are robust financial results from its Google Search business, which has seen accelerated revenue growth due to innovative AI features. The Google Cloud division is also thriving, actively working to address a massive backlog of orders for AI data centers. The influence of Nvidia’s chips is evident, as they are widely recognized as a standard for AI model development, appealing to tech giants like Microsoft and Meta as well.
Investors should note that while the Roundhill ETF boasts impressive returns, it comes with a higher expense ratio of 0.75%, compared to the much lower fees of passive index funds. Nevertheless, the returns since the ETF’s launch in 2023 have justified these costs, rewarding its investors significantly.
Similarly, the iShares Future AI and Tech ETF offers investors a diverse view across the global AI landscape, also focusing on data centers and chip suppliers critical to the AI boom. With a slightly larger inventory of 51 stocks, its top five positions account for about 23% of the portfolio, featuring major companies like Advanced Micro Devices, Vertiv Holdings, Nvidia, Advantest Corp, and Broadcom.
Advanced Micro Devices emerges as a competitive player in the AI market, preparing to release a new series of GPUs in 2026. Broadcom also plays a vital role by supplying customizable AI accelerators and networking solutions essential for efficient data processing. Vertiv, with its tenfold stock price surge since the onset of the AI surge in early 2023, delivers crucial services to data center operators, enhancing their operational capabilities.
The iShares ETF has reported a 28% return this year, well ahead of the S&P 500. The fund features a lower expense ratio of 0.47%, making it an attractive option for those looking to invest in the AI sector while minimizing costs.
As AI continues to drive market performance, both the Roundhill and iShares ETFs present compelling options for investors. Adding these funds to diversified portfolios could provide a strategic advantage in capitalizing on future growth in the AI industry. The momentum shows no signs of slowing down, and positioning for the landscape of 2026 could yield significant benefits for those ready to embrace the potential of AI technologies.
