Not every investor picks individual stocks.
With Nvidia (NVDA) the most greatly impacted, the Magnificent Seven stocks were recently slammed. That's because news broke that China AI company DeepSeek has made significant progress in AI.
Investing in exchange-traded funds (ETFs) can be a smart alternative to buying individual stocks, as they often require less effort while offering greater diversification.
Last week, China artificial intelligence (AI) roiled markets by unveiling significant AI advances at a low price point and using arguably antiquated semiconductor technology. Predictably, that news sparked a sell-off, albeit temporary, in some of the well-known technology stocks residing in ETFs like the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM).
For investors looking for a passive way to bet on big tech and the ongoing artificial intelligence (AI) boom, there are ample different exchange-traded fund (ETF) products that can get the job done.
The S&P 500 (^GSPC -0.29%) is the most closely followed benchmark to gauge the performance of the overall stock market. In the past decade, it has produced a total return of nearly 254%.
Investing in fast-growing companies can help investors build significant wealth over the long term before they shift to more conservative strategies closer to retirement. However, growth stocks can be challenging.
QQQ has outperformed the S&P 500, delivering higher total and risk-adjusted returns. But its tech concentration and elevated valuations pose risk. I present an optimal addition to QQQ that increases the Sharpe ratio, optimizing risk-adjusted returns.
Fourth-quarter earnings reports will soon start rolling in. Assuming that news is good, it could assuage skittish investors.
You don't have to build a fancy stock portfolio. Many investors simply settle for a market-tracking index fund, and keep adding funds to that boring but effective long-term investment.
When it comes to investing in artificial intelligence (AI) stocks, there are several great ETFs that will allow you to do that without much individual stock risk. Some track various AI-focused indexes, while others are actively managed funds that try to beat the benchmark indexes.