AI, robotics & automation key investment themes in first half, says Global X ETFs
21 Jun 2023
Exchange traded funds (ETFs) provider Global X ETFs says artificial intelligence, robotics and automation and mobility are the key investment themes for the first six months of 2023.
Global X senior portfolio strategist Michelle Cluver said the current market uncertainty emphasises the need for downside protection, which can be achieved by focusing on large-cap quality stocks.
“Incorporating thematic exposure in the portfolio can offer long-term diversification benefits and provide flexibility during shifts in the market cycle,” she said.
Cluver said artificial intelligence is real and unstoppable, despite the recent market rally surrounding AI-related equities.
It is important to recognise that AI is a long-term theme with significant staying power, she added.
“Researchers have been diligently working on AI, including generative AI, for several years. For instance, OpenAI has already established itself as a key player in the field over the past seven years.
“This ecosystem encompasses companies engaged in semiconductors, cloud computing, and cybersecurity, among others, which stand to benefit from the cascading effects of AI advancements.”
Considering the continuous innovation in the AI space, Global X expects a significant growth trajectory.
“We expect the global AI market to grow at a compound annual growth rate (CAGR) of 35.6 per cent to nearly US$300 billion in sales by 2026, 10 times its size in 2020,” she said during a media briefing today.
Cluver added that automation plays a key role in driving efficiency, growth and transforming production processes, and enables companies to achieve higher productivity levels through increased efficiency, cost reduction and improved product quality.
“While labour both onshore and offshore continues to be more expensive over time, robotics costs have declined.
“This dynamic alongside improving technology is driving the case for adopting automation.”
She also noted that the adoption of electric vehicles (EVs) is the primary pathway for reducing greenhouse gas emissions throughout the transport sector.
“EVs are forecast to account for 36 per cent of global vehicle sales in 2030 and 55 per cent in 2035.
“As the world moves closer to a netzero economy by mid-century, EVs could make up more than 75 per cent of sales.””
Cluver said the deliveries of electric vehicles have been increasing, with a greater emphasis on pure EVs as opposed to hybrids.
“The mix of vehicles has shifted from 62 per cent pure EVs in 2016 to 71 per cent in 2021.”
She added that the autonomous vehicle (AV) market will develop in lockstep with technical advancements, with the global market for AVs expected to reach US$1.8 trillion by 2030.