Hot tech stock ETFs are sitting on big gains. Is it time to sell?
Artificial intelligence has become one of the biggest investment stories in the market, helping to flood assets into thematic exchange-traded funds that allow retail investors to bet on big technology trends. However, experts warn that these funds can fall as quickly as they rise. This is a simple but important point for investors to keep in mind as tech stocks look more vulnerable, causing the market to decline in recent days. Nasdaq It is flirting with a decline below the 50-day moving average for the first time since the April pullback and posted its third straight session of losses on Thursday.
“We have approximately 400 ETFs at ETF Action that we classify thematically,” said Mike Akins, co-founder of the research firm. ETF Actionhe said on CNBC’s “ETF Edge” on Monday. “The top performer is up over 150% to date… there are a few negative 10% as well,” he said.
Investors are attracted to thematic ETFs that cover trends from artificial intelligence to quantum computing, clean energy to defense technology, but they often overlook risks, including how volatile portfolios can be. Because thematic ETFs focus on specific sectors or technologies rather than just tracking broad indices, they can deliver strong gains when a theme is in their favor, but momentum can weaken.
ETF Action divides the thematic ETF universe into 12 main categories with many subgroups. In the disruptive technology category alone, which includes artificial intelligence, flows have been huge this year. “AI disruptive technology has seen nearly $20 billion in flows year-to-date,” Akins said. About $15 billion of that is “AI” in the ETF name, he said.
Ripple has helped lift funds such as: Global X Artificial Intelligence and Technology ETF (AIQ) The company, whose asset size reached approximately 7 billion dollars, has attracted a net flow of approximately 3 billion dollars since the beginning of the year. ETF.com. greatest assets Advanced Micro Devices, AlphabetSAMSUNG, Tesla’s And Alibaba’s. Another example from Global X is Robotics and Artificial Intelligence ETF (BOTZ)A company with approximately $3 billion in assets under management. greatest assets NvidiaABB, Fanuc, Intuitive Surgery And Keyence.
Thematic ETFs require more research than traditional funds. Case in point: Among the 18 ETFs that ETF Action classifies as AI-focused, Akins said there’s a 60% performance gap this year.
“Every time you see a new ETF come to market, there is significant tracking error that comes from just investing in the market,” he said.
During the first nine months of 2025, Nearly 800 ETFs were launchedThis surpasses the record for ETF launches set last year, according to Reuters. Morning star data Indicates that there are more ETFs (more than 4,300 ETFs listed in the US) than individual stocks traded in the US
Akins called the growth of the ETF market “extremely positive” for the investor experience, but added that an increasing number of opportunities also means greater risk.
Some of the themes that led the first wave of thematic investing may lose momentum as standalone investment stories, even if the trends remain fundamental to the tech sector and market, Akins said. For example, ETFs built around the themes of cloud computing and next-generation connectivity have seen multibillion-dollar outflows over the past few years as the largest holdings mature and become part of broad-based stock market indices already held by investors.
He emphasized that this is not a statement on whether cloud computing or connectivity are currently good or bad investment themes, just that a theme has a “life cycle” that may lead to less interest and less flow as the theme matures. Ultimately, this may mean that themes don’t offer the high growth opportunities they did when they first became popular.
But Akins added that it is difficult to determine the timeline of each trend’s momentum.
“I think each theme is unique, so some will play longer than others,” Akins said. “That’s part of the story in this space… I definitely have an idea that I’m going to invest in this because I believe this will continue over the next three to seven years.”
It’s important to note that despite recent volatility in the stock market and tech stocks in particular, the Nasdaq is still less than 5% off its all-time record high and has gained close to 250% since the Covid low point.. Akins said thematic investing is valuable for investors who understand what they’re buying and can tolerate short-term fluctuations.
Catching moments of opportunity in the market can also be important for thematic strategies. “Themes can run very quickly, so you should take advantage of that,” Akins said. Achieving significant gains in a short period of time may lead investors to consider taking some profits. “You still want to make an allocation to the theme, but maybe spare a little bit from the top,” he added.
Top 10 disruptive technology ETFs
First Trust Nasdaq Cyber Security (CIBR)
Assets: $11.5 billion
Expense ratio: 0.59%
YTD performance: 20%
iShares AI Innovation and Technology (BAI)
Assets: $7.6 billion
Expense ratio: 0.68%
YTD performance: 30.5%
Global X AI and Technology ETF (AIQ)
Assets: $7.2 billion
Expense ratio: 0.68%
YTD performance: 33.6%
Roundhill Magnificent Seven (MAGS)
Assets: $4 billion
Expense ratio: 0.29%
YTD performance: 22.2%
First Trust Cloud Computing (SKY)
Assets: $3.3 billion
Expense ratio: 0.60%
YTD performance: 14.4%
Defiance Quantum ETF (QTUM)
Assets: $3.2 billion
Expense ratio: 0.40%
YTD performance: 37%
JPMorgan US Technology Leaders (JTEK)
Assets: $3.1 billion
Expense ratio: 0.65%
YTD performance: 22.8%
Increase Cyber Security (TO CUT)
Assets: $2.3 billion
Expense ratio: 0.60%
YTD performance: 15.5%
ARK New Generation Internet (ARKW)
Assets: $2.2 billion
Expense ratio: 0.75%
YTD performance: 51.2%
Roundhill Generative Artificial Intelligence and Technology (CHAT)
Assets: $1.1 billion
Expense ratio: 0.75%
YTD performance: 55%
Source: ETFAction.com
