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Roundhill Investments has launched what it calls the first US exchange-traded fund (ETF) explicitly focused on generative AI, a technology that analysts say has the potential to reshape entire industries.
The Roundhill Generative AI & Technology ETF, also known by its stock listing “$CHAT”, began trading on the New York Stock Exchange this morning. The actively managed fund offers investors exposure to companies developing generative AI and related technologies.
“The progress that ChatGPT has made has really brought generative AI into the mainstream,” Roundhill Investment chief investment officer Tim Maloney said in an interview with VentureBeat. “The growth in the user base and public awareness of generative AI and ChatGPT has been tremendous. We haven’t really seen anything like it in recent history, or in history in general.”
“If you look at the speech from corporate executives, there is talk of artificial intelligence now, so far in 2023, more than cloud computing in earnings transcripts and other corporate presentations,” said the director of research at Roundhill Investments. , Matthew Kanterman. “So it underscores that this is where consumers are focused. If you look at Google Trends, or what corporate executives are focused on, this is the next big thing.”
A major milestone for the generative AI industry
Some generative AI applications are already showing an impact in the real world. OpenAI’s ChatGPT has attracted more 100 million users and it is being integrated by companies to improve processes such as writing and coding software.
The launch of the CHAT ETF indicates that generative AI is moving from a niche technology to the mainstream. Goldman Sachs analysts estimate that AI in general could boost $7 trillions in economic growth over the next seven years through increased productivity.
Roundhill pegs the potential market for generative artificial intelligence enterprise software at $120 billion. But until now, few options existed for investors who wanted exposure to the nascent sector.
“We estimate the total addressable market for generative AI enterprise software applications alone to exceed $120 billion in a decade, and we got there just by thinking about how quickly we believe the technology can penetrate every corner of enterprise software, software growth overall market and acceptance of these applications over time,” Kanterman said.
The launch of the CHAT ETF signals that generative AI has reached a tipping point: growing fast enough to warrant its own investment vehicle, but still poised for more rapid adoption and growth in the coming years. With the potential to transform creative fields, business processes, and more, generative AI may be entering a historic phase that could shape our economies and societies for decades to come.
“When you think about the ability of this to be a multi-billion dollar economic transformation,” Kanterman added, “and represent a multi-billion dollar addressable market, just for enterprise, let alone getting into consumer applications, it really starts to get exciting”.
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