Best AI ETFs to Buy Now: XAIX vs AGIX Comparison

Artificial intelligence is reshaping everything from cloud computing and cybersecurity to healthcare diagnostics and industrial automation. For investors, that creates a clear question: how do you gain exposure to AI without betting on a single winner? Two popular approaches are AI-themed exchange-traded funds (ETFs) that bundle multiple companies into one tradable product. In this comparison, we’ll break down XAIX vs AGIX across strategy, holdings, diversification, risks, and what type of investor each may suit.

Why Invest in AI ETFs?

AI is not one industry; it’s a horizontal technology that can boost productivity across many sectors. That’s precisely why AI ETFs are attractive: they may capture innovation while spreading risk across multiple companies rather than relying on one stock to dominate.

Key benefits investors often look for in AI ETFs include:

• Diversification: exposure across software, semiconductors, cloud, and AI-enabled services.
• Theme access: a focused way to target AI growth without deep stock-by-stock research.
• Liquidity and simplicity: buy and sell like a stock during market hours.
• Potential long-term tailwinds: automation, data center buildouts, and enterprise AI adoption.

At the same time, AI ETFs can be volatile. Many hold high-growth companies whose valuations can swing sharply with interest rates and market sentiment.

XAIX vs AGIX: Quick Overview

Before diving deeper, it helps to understand that “AI ETF” can mean different things. Some funds focus on AI enablers (chips, infrastructure, cloud), while others tilt toward AI applications (software and platforms) or even broader next-gen tech baskets.

What is XAIX?

XAIX is typically positioned as an AI-focused ETF designed to provide exposure to companies involved in the development, deployment, or commercialization of artificial intelligence. Depending on its index methodology, XAIX may emphasize:

• Companies building AI compute and infrastructure (e.g., semiconductors, data centers).
• Businesses delivering AI software and services (enterprise platforms, analytics, automation).
• Firms with meaningful revenue linkage to AI adoption instead of AI as a buzzword.

What is AGIX?

AGIX is also marketed as a way to capture AI exposure through a basket of AI-related equities. Depending on how its index is constructed, AGIX may lean more toward:

• Innovative growth stocks tied to emerging AI applications.
• Potentially higher exposure to mid-cap or smaller firms involved in AI tooling, robotics, or specialized software.
• A thematic selection process that may be more concentrated than broad tech ETFs.

Important note: ETF strategies and holdings can change over time. Always review the fund’s fact sheet, index rules, holdings list, and fees before investing.

Strategy and Index Methodology: How Each ETF Picks Stocks

The biggest difference between AI ETFs often comes down to selection rules. Two funds can both claim AI exposure while owning very different companies.

XAIX Strategy Highlights

XAIX commonly appeals to investors who want a more core AI approach, which may include:

• Revenue relevance screens that aim to select companies with measurable AI involvement.
• A blend of hardware + software, which can reduce reliance on a single segment.
• More emphasis on established large-cap leaders if the methodology favors scale and liquidity.

AGIX Strategy Highlights

AGIX may appeal to investors seeking stronger thematic purity or earlier-stage opportunity, which can involve:

• Higher thematic concentration in companies directly linked to AI applications.
• More exposure to smaller, faster-growing names (but potentially more volatility).
• A portfolio that may change more frequently if the index rebalances aggressively.

Diversification: Sector, Geography, and Concentration Risk

AI’s value chain is broad, so diversification matters. A well-balanced AI ETF often includes multiple layers of the ecosystem:

• Semiconductors: GPUs, AI accelerators, memory, networking.
• Cloud and platforms: hyperscalers and enterprise AI stacks.
• Software: automation, ML ops, analytics, cybersecurity.
• Edge AI and devices: industrial automation, robotics, IoT.

XAIX Diversification Profile

XAIX may provide broader diversification if it includes both AI enablers and AI adopters. That can be beneficial because semiconductor-heavy portfolios can be cyclical, while software-heavy portfolios can be rate-sensitive and valuation-driven.

AGIX Diversification Profile

AGIX may be more concentrated in high-growth AI disruptors. Concentration can boost upside if the theme rallies, but it increases drawdown risk if risk appetite fades or if a few top holdings stumble.

Holdings and Exposure: What You’re Really Buying

Rather than focusing only on names, focus on exposures. Ask these questions when comparing XAIX vs AGIX:

• How much is in semiconductors? Chip-heavy ETFs can surge during AI spending booms but may drop sharply in downturns.
• How much is in mega-cap tech? If the ETF resembles a Magnificent Seven proxy, it may overlap with your existing S&P 500 or Nasdaq exposure.
• Is there meaningful mid-cap exposure? Mid-caps can offer higher growth potential but more volatility.
• Does the ETF include non-U.S. leaders? AI supply chains are global, and international exposure can diversify risk.

In many AI ETFs, a handful of top holdings can drive a large portion of returns. Check the top 10 weight and ensure you’re comfortable with concentration.

Fees, Liquidity, and Trading Considerations

Two practical elements can affect real-world returns: expense ratio and liquidity.

Expense Ratio

Thematic ETFs often cost more than broad-market ETFs. If XAIX has a lower fee than AGIX (or vice versa), that difference compounds over time. However, a slightly higher fee can be acceptable if the fund offers a strategy you can’t easily replicate.

Liquidity and Bid-Ask Spreads

If one fund trades with lower daily volume, you may see wider bid-ask spreads. This matters most for short-term traders, but even long-term investors should consider using limit orders to avoid overpaying.

Performance Drivers: What Could Make XAIX or AGIX Outperform?

AI ETFs don’t move only on AI headlines. Their returns usually hinge on a mix of macro and industry factors:

• Enterprise spending cycles: AI software and cloud adoption trends.
• Data center capex: demand for GPUs, networking, and power infrastructure.
• Interest rates: growth stocks often fall when rates rise because future earnings are discounted more aggressively.
• Regulation: AI governance, data privacy, and IP rules can influence adoption speed.
• Earnings quality: whether AI translates into real margins and cash flow.

If XAIX is more balanced across hardware and software, it may hold up better through rotations. If AGIX is more concentrated in high-growth innovators, it may outperform during strong risk-on rallies.

Risk Factors to Know Before Buying

Both XAIX and AGIX are thematic funds, so it’s smart to consider the main risks:

• Theme risk: if AI adoption is slower than expected, the basket can lag broader indexes.
• Concentration risk: heavy weights in a few names can amplify losses.
• Valuation risk: AI stocks can price in optimistic growth assumptions.
• Tech cycle risk: semiconductors and IT spending are cyclical.
• Overlap risk: you may already own similar exposure through broad tech ETFs.

Which Is Better to Buy Now: XAIX or AGIX?

The better choice depends on your portfolio and risk tolerance.

XAIX May Be Better If You Want:

• A more diversified AI core holding that blends infrastructure and applications.
• Potentially lower volatility than an aggressive, smaller-cap AI basket.
• Long-term exposure aligned with broad AI adoption across sectors.

AGIX May Be Better If You Want:

• Higher thematic concentration and stronger sensitivity to AI momentum.
• More upside potential if emerging AI winners outperform.
• A satellite position to complement a core index fund.

Many investors use a core + satellite approach: choose a broader AI ETF as a base, then add a higher-octane AI thematic ETF for extra tilt. If your portfolio already has heavy mega-cap tech exposure, you may prefer the fund that offers more differentiated holdings.

Practical Checklist Before You Invest

Use this quick checklist to confidently compare XAIX vs AGIX:

• Review the top holdings and top 10 concentration.
• Check the expense ratio and any index licensing costs.
• Look at bid-ask spreads and average volume; use limit orders.
• Confirm the fund’s AI definition and screening rules.
• Assess portfolio overlap with your current ETFs and stocks.
• Decide position sizing: AI themes can be volatile, so keep it proportional to your risk tolerance.

Final Thoughts

Both XAIX and AGIX offer compelling ways to invest in the AI megatrend, but they may deliver very different experiences depending on diversification, concentration, and exposure to hardware versus software. If you want a steadier, more balanced AI allocation, XAIX may fit better. If you’re targeting a more aggressive thematic tilt with potentially bigger swings, AGIX may be the better satellite holding.

Whichever you choose, the best AI ETF is the one that matches your time horizon, risk tolerance, and existing portfolio exposure. Review the current holdings and methodology, and consider scaling in over time to manage volatility.

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