BlackRock, Invesco Execs See AI Prospects Beyond Mag 7

BlackRock, Invesco Execs See AI Prospects Beyond Mag 7

A plethora of A.I. investments abound beyond the "Magnificent Seven," according to BlackRock’s Jay Jacobs.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Ron Day

While a handful of tech stocks drove the S&P 500 to recent record highs, investment strategists say that investors looking beyond the narrow scope of the so-called Magnificent Seven will find a range of opportunities in the A.I. and emerging technology themes.

“It’s hard to overstate the impact of A.I. on the economy,” explained Jay Jacobs, U.S. Head of Thematics and Active Equity ETFs at BlackRock at the ETF Exchange conference on Feb. 12 in Miami Beach, Florida. “The reason that A.I. is so powerful is because it is a platform technology."

In the past year, a set of "Magnificent 7" stocks—which include Amazon.com Corp., Meta Platforms Inc. and Apple Corp. among others—outperformed the wider market by a significant margin, driving tech indexes up over 50% in 2023. Part of what drove their growth was the launch of generative A.I. products, such as Open AI’s Chat GPT and Google’s Gemini chatbot. ETFs such as the $2.4 billion Global X Robotics & Artificial Intelligence ETF (BOTZ) was up 39% over last year, while the $1.3 billion ROBO Global Robots And Automation Index ETF (ROBO) was up 23% over 2023. Yet thematic investing experts say that there are huge opportunities to integrate emerging tech into your portfolio beyond big names.

As more firms begin to adopt and scale machine learning capabilities, a larger swath of publicly traded companies beyond top tech giants should gain in value the experts said. 

“From an investor perspective, so much of returns of A.I. have been focused on the magnificent seven stocks,” Jacobs said in an interview with etf.com. 

“What's really been left behind is the 100 or so companies beyond that,” he added. “We expect a broadening out of AI opportunity beyond the Magnificent Seven to the full value chain of AI ETFs."

Thematic Opportunities in Data and Medicine

Ryan McCormack, the Factor and Core Equity Strategist at Invesco Capital Management, spoke as part of the conference’s “Thematic Investing in 2024” panel and said that data is a big theme that holds huge potential gains for investors. He argued that while semiconductor stocks have seen a lot of the boon to their stock price from A.I. excitement, chips and A.I. models need huge swaths of data to run effectively.

McCormack and Jacobs both pointed to healthcare as a sector that is poised to benefit from medical innovation breakthroughs and increasing A.I. integration in processes such as research and drug development.

McCormack emphasized that there are many plays to get exposure to thematic growth in the ETF wrapper. The Invesco QQQ ETF (QQQ) is one way to get broad exposure to the tech sector, while more narrow funds such as the BlackRock Future Health ETF (BMED) can offer precise exposure.

Contact Lucy Brewster at [email protected]

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.