Artificial intelligence, or AI, has continued to play a big role in global equity market performance. As evidence, the Morningstar Global Next Generation Artificial Intelligence Index is up over 42% in 2024 (as of Dec. 6) versus a 21.4% return for its parent benchmark, the Morningstar Global Markets Index for the same time period.
The AI index, which was introduced in August 2023 with performance backcast to December 2021, is designed to deliver thematically pure exposure to leading-edge artificial intelligence technologies by drawing on the in-depth knowledge and forward-looking insights of Morningstar’s equity research team. The index reflects broad AI exposure across generative AI, AI data and infrastructure, AI software, and AI services.
This diversified exposure to the broad AI theme means that it benefits from the strong performance of Nvidia (NVDA), but also taps into the growth potential of other tech sector leaders who are benefitting from AI, like Broadcom (AVGO), Meta Platforms (META), and Palantir Technologies (PLTR).
Brian Colello – CPA, Equity Strategist, Morningstar
“Given the incredible popularity of AI-oriented strategies among investors, it is important to understand the nature of company exposure to this theme and ensure that the exposure is genuine. In our opinion, keyword searches and other types of top-down approaches are likely to produce results with less thematic purity to AI, and investors are better served through a fundamental, bottom-up research-oriented approach.”
Andrew Lane – Director of Equity Research - Index Strategies, Morningstar
“Our Global Next Generation Artificial Intelligence Index has benefitted by combining the rules-based and transparent approach of an index with the unique insights provided by our Morningstar Equity Research team. The Index also provides a diversified exposure across the AI ecosystem, which will continue to be important as companies strive to reduce their reliance on Nvidia as a supplier and the segment continues to broaden.”
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