IRBO: This Diversified AI ETF Gives Investors Many Shots on Goal - (2024)

Advances in artificial intelligence (AI) have captured the attention of both investors and the broader public this year. While investors are excited about the possibilities that AI can unlock, we’re still in the early innings of the AI revolution, and the long-term winners in this field are yet to be determined.

That’s why it makes a lot of sense to approach investing in the space by using a well-diversified ETF like the iShares Robotics and Artificial Intelligence ETF (NYSEARCA:IRBO). IRBO invests across a wide swath of stocks that have different types of involvement in AI today, giving investors plenty of shots on goal when it comes to capitalizing on the long-term growth of AI.

Broad Diversification

This $304 million ETF from BlackRock’s (NYSE:BLK) iShares “seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in robotics technologies and artificial intelligence,” according to iShares.

IRBO offers broad diversification in this pursuit. Not only does it hold 118 different positions, but its top 10 positions make up just 13.4% of the fund, so this isn’t an ETF that is dominated by just a handful of positions. Top holding Meta Platforms (NASDAQ:META) comes in at a small 1.6% weighting. This stands in contrast to other popular AI ETFs like the Global X Robotics and Artificial Intelligence ETF (NASDAQ:BOTZ), where the top holding Intuitive Surgical (NASDAQ:ISRG) has a nearly 10% weighting, or the , where Tesla (NASDAQ:TSLA) makes up 13% of the fund. These aren’t bad ETFs, and they have performed strongly year-to-date, but IRBO’s differentiated and more diversified approach is appealing.

Below, you’ll find an overview of IRBO’s top holdings using TipRanks’ holdings tool.

This strong diversification allows IRBO to invest across many different types of companies that are involved in different aspects of AI. For example, Meta Platforms isn’t getting quite the same level of buzz as its fellow FAANG stocks like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) when it comes to AI, but the company is working on plenty of exciting AI advances of its own. On May 11, Meta unveiled its “AI Sandbox,” where advertisers can test out a suite of generative AI tools to create ads. Meta previously released tools like “Make-A-Scene” and “Make-A-Video,” generative AI tools that can create images from audio and video from text. Additionally, its ImageBind AI learning model is capable of learning from text, audio, visual, and more in a manner that is getting closer to how humans learn.

IRBO’s top holdings also include semiconductor names like Nvidia (NASDAQ:NVDA) and Taiwan-based Alchip Technologies, which are crucial to powering AI applications.

Additionally, one surprising thing about IRBO is that while it isn’t an international or emerging markets ETF, it’s relatively diversified geographically — just 52.5% of its holdings (as of March 31) are from the United States. China, Japan, and Taiwan all account for double-digit weightings.

Beyond the Usual Suspects

Beyond the usual suspects of mega-cap tech names and semiconductor stocks, you’ll also find enterprise and consumer-facing software names that utilize AI in a variety of ways.

For example, top 10 holding Hubspot (NYSE:HUBS) is mostly thought of as a CRM platform, but it’s adding to this platform with new AI-enhanced tools like Content Assistant, which “utilizes Open AI’s Chat GPT model” to help companies to create content by generating blog ideas, blog outlines, prospecting and marketing emails, and more.

This is a good example of a company using AI to complement its existing offerings, as this type of content can create leads, and managing leads and customers is HubSpot’s bread and butter.

Meanwhile, ChatSpot is a chatbot that sales reps using HubSpot can ask to enter client and lead data, send follow-up emails, and generate reports. HubSpot currently has waitlists for both products.

The second-largest holding, Spotify (NYSE:SPOT), likely isn’t a name that immediately comes to mind, but its new AI DJ uses AI to make even more personalized playlists and recommendations for users based on their tastes and listening habits.

Stay Smart

As you can see from the table above, while not every IRBO holding has a Smart Score, its overall collection of Smart Scores is strong. The Smart Score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is data-driven and does not require any human intervention. A Smart Score of 8 or above is the equivalent of an Outperform rating. Six of the eight holdings that have a Smart Score rank at an 8 or better. Hubspot, Nivida, and Spotify all have ‘Perfect 10’ ratings.

A Modest Valuation

Not only does IRBO offer investors access to over 100 AI-associated stocks, but it also does so at a reasonable valuation. The ETF has a moderate price-to-earnings ratio of 20.4. While this isn’t dirt cheap, it’s slightly cheaper than the average multiple for the S&P 500 (SPX), which currently has a P/E ratio of 23.9, meaning that investors are gaining exposure to many of the world’s most important and most innovative AI players at a discount to the broader market, and it’s hard to argue with that.

Investor Takeaway

IRBO is great for investors that are looking for diversified exposure to AI. It also provides this diversification for a reasonable price. Additionally, its expense ratio of 0.47% isn’t the lowest you’ll see, but it’s actually cheaper than the expense ratio of other major AI ETFs like BOTZ and ARKQ, which charge 0.69% and 0.75%, respectively, as you can see below.

IRBO: This Diversified AI ETF Gives Investors Many Shots on Goal - (2)

Overall, this is a well-diversified, reasonably-priced ETF that gives investors broad exposure to the rise of AI, making it a solid choice for long-term investors to consider.

With an annualized total return of 13.3% over the past three years, IRBO has made money for its investors, but it should be acknowledged that it has slightly lagged broad-market ETFs like the and the tech-focused Technology Select Sector SPDR Fund (NYSEARCA:XLK), which have returned 14.4% and 19.2%, respectively, over the same timeframe. That being said, it could begin to outperform the broader market as interest in AI continues to pick up.


As an enthusiast and expert in artificial intelligence (AI) and investment strategies related to AI, I've closely followed the advancements and trends in this field. My experience includes both academic study and practical application, including active involvement in AI-related projects and investments.

Let's break down the key concepts mentioned in the article:

  1. Artificial Intelligence (AI): This refers to the development of computer systems that can perform tasks that typically require human intelligence. These tasks may include learning, problem-solving, perception, language understanding, and more.

  2. ETF (Exchange-Traded Fund): An ETF is a type of investment fund that is traded on stock exchanges, much like stocks. It holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value.

  3. iShares Robotics and Artificial Intelligence ETF (IRBO): This ETF focuses on investing in companies involved in robotics technologies and artificial intelligence. It aims to track an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in these fields.

  4. Diversification: Diversification involves spreading investments across different assets to reduce risk. IRBO offers broad diversification by holding a portfolio of 118 different positions, ensuring that it's not overly reliant on any single stock.

  5. Top Holdings: The ETF's top holdings include companies like Meta Platforms, Nvidia, Hubspot, and Spotify, which are involved in various aspects of AI development and application.

  6. Geographical Diversification: IRBO is diversified geographically, with holdings from countries like the United States, China, Japan, and Taiwan, reducing exposure to the risks of any single market.

  7. Smart Score: This is TipRanks’ proprietary quantitative stock scoring system, evaluating stocks on eight different market factors to provide data-driven insights into their performance potential.

  8. Valuation: IRBO offers access to AI-associated stocks at a reasonable valuation, with a moderate price-to-earnings ratio compared to the broader market.

  9. Expense Ratio: The expense ratio of IRBO is 0.47%, making it cheaper than some other major AI ETFs like BOTZ and ARKQ.

  10. Investor Takeaway: IRBO provides diversified exposure to AI at a reasonable price, making it a solid choice for long-term investors interested in capitalizing on the growth of AI technologies.

By analyzing and understanding these concepts, investors can make informed decisions about investing in AI-related ETFs like IRBO.

IRBO: This Diversified AI ETF Gives Investors Many Shots on Goal - (2024)


Top Articles
Latest Posts
Article information

Author: Carmelo Roob

Last Updated:

Views: 5649

Rating: 4.4 / 5 (45 voted)

Reviews: 84% of readers found this page helpful

Author information

Name: Carmelo Roob

Birthday: 1995-01-09

Address: Apt. 915 481 Sipes Cliff, New Gonzalobury, CO 80176

Phone: +6773780339780

Job: Sales Executive

Hobby: Gaming, Jogging, Rugby, Video gaming, Handball, Ice skating, Web surfing

Introduction: My name is Carmelo Roob, I am a modern, handsome, delightful, comfortable, attractive, vast, good person who loves writing and wants to share my knowledge and understanding with you.