The ALPS O’Shares Global Internet Giants ETF (OGIG) is highlighting a transition in artificial intelligence investing, moving from hardware expenditures to revenue generation as companies monetize AI through advertising and data licensing, according to the fund’s quarterly insights report.
Over the past three years, the internet giants ETF has recorded a return of 29.1%, surpassing its category average of 24.2%. Gains were driven by companies beyond the Magnificent Seven that are leveraging AI to optimize ad targeting and enhance user engagement, as stated by SS&C ALPS.
AppLovin Corp. (APP), comprising 2.4% of OGIG, experienced a significant surge of 105.25% in the third quarter. This rise followed the expansion of its AI advertising engine, Axon, into e-commerce and other sectors. The company was added to the S&P 500 Index in September.
AppLovin’s Axon engine employs artificial intelligence to assist app developers and marketers in user acquisition and ad revenue optimization. The expansion into non-gaming markets was facilitated by the Axon Ads Manager tool, resulting in multiple price target upgrades from Wall Street analysts.
In addition, Reddit Inc. (RDDT), which holds 1.7% of the fund, rose 52.75% in Q3, benefiting from revenue increase driven by advertising and data licensing agreements that leverage its archive for AI training. The platform reached all-time highs after delivering quarterly earnings that exceeded analyst expectations.
To date, the fund has gained 15.6% and reported a 14.3% return over the past year, with assets under management totaling $141.8 million and an expense ratio of 0.48%.
Meta Platforms Inc. (META) is the largest holding of the fund at 6.2%, followed closely by Microsoft Corp. (MSFT) at 6.1% and Alphabet Inc. (GOOGL) at nearly 6%.
In the third quarter, the communication services sector provided the best performance for OGIG, contributing 3.8% to returns. Information technology added 2.2%, while consumer discretionary contributed 1.2%.
OGIG tracks the O’Shares Global Internet Giants Index, which evaluates companies based on gross margin and cash flow sustainability.
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