AI Thematic Funds Are Outperforming — But Are Investors Buying the Right Exposure

The thematic ETF universe has never moved faster, and the AI category is doing most of the running. With assets flooding into funds like BAI and AIQ — which posted a 38% quarterly surge in assets under management — the easy narrative is that investors are finally getting paid for their conviction on artificial intelligence. The harder question, and the one that separates sophisticated fund selectors from momentum chasers, is whether the exposure those funds actually provide matches the AI opportunity that investors think they’re capturing.

AI as an investment theme is not monolithic. The 2026 version of the AI trade looks materially different from the version that dominated headlines in 2023 and 2024, when the story was primarily about semiconductor stocks and the mega-cap technology companies building foundational models. That phase generated enormous returns — and elevated valuations that now carry their own risk. The current phase of the trade is broader, more diffuse, and in some ways more interesting: it’s about which industries are being structurally transformed by AI adoption, and whether those transformation stories are priced into fund holdings or not.