As we look toward 2025, the financial landscape is brimming with opportunity, especially in the spheres of infrastructure and cybersecurity, given the exponential growth of artificial intelligence (AI). Jay Jacobs, the U.S. head of thematic and active ETFs at BlackRock, emphasizes that the ongoing AI revolution is only in its nascent stages. This early phase presents a unique investment frontier that savvy investors should not overlook. Jacobs recently shared his insights during an interview with CNBC’s “ETF Edge,” outlining key sectors poised for growth in this transformative era.
Data Centers: The Backbone of AI
One critical insight from Jacobs is the pressing need for AI companies to develop robust data center infrastructures. As organizations increasingly rely on data for their operations, data centers will become integral components in supporting AI applications. The demand for data storage and processing capabilities is at an all-time high, and investors would do well to pay attention to this sector. Jacobs suggests that by tapping into investments related to data centers, one could harness significant returns as enterprises scramble to meet their technological needs.
Closely linked to the evolution of AI is the increasing necessity for enhanced cybersecurity measures. With data becoming an asset of immense value, both businesses and individuals are urged to invest in its protection. Jacobs articulates that as more data is created and stored, the risk of data breaches and cyber threats escalates. Thus, investing in cybersecurity companies emerges as a sound strategy. Organizations are expected to bolster their cybersecurity protocols, propelling growth within this sector. This dual focus on infrastructure and security creates a concrete investment narrative that aligns with contemporary technological advancements.
Jacobs cautions investors against limiting their focus solely to mega-cap technology stocks. Instead, he encourages a broader perspective that includes smaller semiconductor firms, data center operators, and various software companies that stand to benefit from this AI revolution. It’s essential for investors to recognize that while big tech firms may be grabbing headlines, there exists a rich tapestry of supporting industries that can also yield substantial returns.
For those interested in capitalizing on these trends, Jacobs points to BlackRock’s iShares Future AI & Tech ETF (ARTY) and the iShares AI Innovation and Tech Active ETF (BAI) as viable investment options. With the iShares Future AI & Tech ETF reporting a 13% increase this year, investors are likely finding reassurance in these tools. The iShares AI Innovation and Tech Active ETF, despite being newly launched last October, mirrors this performance with promising growth.
Jacobs’ insights present a compelling case for considering infrastructure and cybersecurity as critical areas of investment in the forthcoming years driven by the AI boom. By broadening one’s investment approach beyond the traditional tech giants and into the realms of data centers and cybersecurity, investors can align their portfolios with the evolving technological landscape. Thus, the message is clear: prepare for a transformative financial future by embracing and investing in the supporting structures that will drive the next wave of innovation.