Industrial and infrastructure stocks are expected to attract more attention soon, alongside the burgeoning artificial intelligence sector.
Mike Atkins from ETF Action sees a positive trend emerging, influenced by both policy and consumer behaviors. His outlook comes as Big Tech and AI stocks experience a turbulent period.
"Traditional infrastructure and industrial products have underperformed in recent years," Atkins, a founding partner of the firm, explained on CNBC's "ETF Edge." "However, there's a significant shift from globalization towards reshoring, which I believe holds great potential."
Ryan O'Connor, CEO of Global X, shares this optimism, particularly because these sectors bolster the AI expansion. His company manages the Global X U.S. Infrastructure Development ETF (PAVE), which focuses on companies engaged in construction and industrial projects.
"Infrastructure is integral to our strategy, especially through PAVE, which is our largest market ETF," O'Connor said during the same interview. "Reshoring efforts accessible via these infrastructure avenues present intriguing opportunities."
Year-to-date, Global X's infrastructure ETF has risen 16%, while the VanEck Semiconductor ETF (SMH), featuring AI giants like Nvidia, Taiwan Semiconductor, and Broadcom, has surged 42% as of last Friday. Although both ETFs have declined this month, Global X's infrastructure ETF is relatively outperforming with top holdings including Howmet Aerospace, Quanta Services, and Parker Hannifin.
In supporting the AI surge, electrification also appears as a favorable factor. "To sustain this AI boom, the electrification of the U.S. economy is essential," O'Connor noted, highlighting his firm’s U.S. Electrification ETF (ZAP) which offers investors exposure to this trend. This ETF has gained nearly 24% this year and is performing a few percentage points better than the VanEck Semiconductor ETF for the current month.