Investors recently paying attention to the AI sector probably share the same feeling; this track is really a bit confusing now. On one side, chip companies like Micron are soaring, up 348% over 12 months, while on the other side, giants like Oracle and Microsoft have seen their stock prices fall quite a bit. Even Nvidia, the absolute leader in AI chips, hasn't been immune, dropping 8% from its high.

That's why many people are especially conflicted when choosing AI stocks now. The performance of individual companies is too hard to predict, especially in an industry like AI that evolves so rapidly. You simply can't track every change in real-time, let alone accurately judge which will continue to rise and which will keep falling.

A solution I've recently been looking into is directly buying AI ETFs instead of obsessing over individual stocks. For example, the iShares Future AI and Tech ETF contains 49 leading stocks from different segments of the AI industry chain. From chip suppliers and data center infrastructure providers to AI software developers and AI service providers, it almost covers the entire AI ecosystem. Plus, it has global investment authorization, allowing investments in both U.S. stocks and international stocks.

I checked out the top ten holdings of this AI ETF, and the weight distribution is quite balanced. Micron accounts for the largest share at 7.61%, because its high-bandwidth memory chips are critical for data centers. TSMC at 5.51%, Nvidia at 4.63%, AMD at 3.98%, along with custom chip designers like Broadcom. On the software side, players like Microsoft, Palantir, and Snowflake are included. From chips to software, hardware to services, one ETF can cover it all.

In terms of costs, it’s also quite reasonable, with a fee rate of 0.47%. Calculated, that’s about 47 dollars in fees per year for a 10k-dollar investment. Although it’s more expensive than passive index funds tracking the S&P 500, considering you save time and effort on stock picking, it’s still worthwhile.

Looking at returns, this AI ETF has provided a 28.5% gain over the past 12 months, roughly twice the performance of the S&P 500 during the same period. But there’s a point to note: although this fund was established in 2018, it only fully restructured in August 2024 to focus on pure AI investments. So, its current performance may not necessarily predict future results.

Overall, if you’re optimistic about the long-term prospects of the AI industry but don’t want to bother picking individual stocks, this kind of AI ETF is indeed a good choice. Just don’t put all your eggs in one basket—treat it as part of your overall investment portfolio. As long as the AI industry continues steady development, this direction should perform well.