In summary

• The Global X Robotics & Artificial Intelligence ETF (BOTZ), the largest AI fund in the world, is up 23% so far in 2023.

• More than half of professional investors plan to add the AI theme to their portfolios this year.

After a somewhat lacklustre 2022, investment in AI startups looks more buoyant. A good example is the world’s largest AI fund, the Global X Robotics & Artificial Intelligence Exchange-Traded Fund (ETF) has increased its investment pot by 23%.

The ETF is one of the largest, with a $ 1.7 billion pot to invest in AI, robotics and tech companies. The fund’s top holding is Nvidia which is performing well this year. It also includes C3.ai and Rainbow, which are performing well too. [1]

Key thinking and insights

Given the rise in Generative AI and the benefits it can potentially bring to enterprises, we will see an increase in the number of Generative AI-based companies. 

The valuations of public AI companies decreased in 2022, falling to levels not seen since 2020. Their combined Enterprise Value (EV) fell by 29% between 2021 and 2022, falling from $9.6 trillion to $6.6 trillion.

Despite the decline in EV on the public side of the industry, valuations have increased in the private sector. In 2022, the enterprise value (EV) of “privately owned startups and scale-ups utilising AI” reached $2.2 trillion, a 16% year-over-year increase.

However, the issue of declining valuations is not unique to the artificial intelligence market. As many investors know, immense macroeconomic pressures have significantly impacted the stability and health of various industries worldwide. This downturn has been primarily caused by rising global inflation rates and ongoing pressures stemming from Russia’s invasion of Ukraine. [2]

There are a lot of firms that have kept their investment ‘power dry’. If the economy is steady, we will see an increase in AI investment this year.

Bottom line

There are a few key points to note:

• Investment in Generative AI and AI said to increase in 2023
• Thirst for AI technology and companies is very strong
• Lack of Generative AI companies causing a mini gold rush

Legal bit

This is an independent view of the AI investment market. It is designed to highlight the trends happening in the industry. If you are looking to invest, please seek further advice and analysis before investing. 

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Reference read more

Thank you to these excellent references for inspiring our thinking:

[1] Market insider – https://markets.businessinsider.com/news/stocks/botz-globalx-robotics-ai-artificial-intelligence-etf-return-outperformance-nasdaq-2023-4

[2] AI investment news – https://investingnews.com/ai-market-update/