Updated Aug 6 at 2:05pm ET.
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The focus of AI investing is expanding beyond just the chips that process data to the hardware that moves and stores it. Photonics, which uses light instead of electricity to transmit information, is becoming a key area of interest because it helps solve bottlenecks in how fast data can travel between servers.
For a specialized fund like this one, the shift is a double-edged sword. While it brings more attention and money into the sector, these concentrated funds can be more volatile than the broader market. This means the price of the ETF may swing more sharply than a general tech fund as people try to pick the winners in these specific sub-sectors.
This ETF has taken a large stake in Anthropic, a major AI company that is not yet traded on the public stock market. By using a special investment vehicle, the fund now holds about 12 percent of its total assets in this one private startup.
This is a significant move because it changes what you are actually buying when you own this ETF. Instead of just owning public companies that make optical parts and lasers, you now have a large bet on a private AI developer. While this offers a rare way for regular people to own a piece of a high-profile startup, it also makes the fund's performance heavily dependent on the success and valuation of a single private business.
Source: Business Wire
Analysts have kept a steady outlook on the stock through August with a recent flurry of positive ratings. Four of the nine analysts rate it a buy, and the average target price suggests the stock is currently fairly valued.
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