This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
It is quite ironic that the AI Powered Equity ETF (AIEQ), an investment vehicle designed to circumvent "human biases" and recognize subtle market cues that humans might miss altogether, is chronically underperforming the benchmark S&P 500 index just because its AI brain refuses to include NVIDIA in the ETF's portfolio.
EquBot + IBM's Watson = AI Powered Equity ETF (AIEQ)
The EquBot startup traces its origins to 2017 when Chada Khatua, Art Amador, and Chris Nativdad decided to use artificial intelligence to actively manage a portfolio of stocks. The trio leveraged IBM's legendary Watson AI, which had gained fame by consistently beating its human counterparts in the trivia-geared TV show Jeopardy, to train their bespoke artificial intelligence model that could analyze real-time data from diverse sources, including social media, the legacy media, and filings with the SEC, to build an alpha-generating portfolio of stocks.
The resulting AI Powered Equity ETF (AIEQ) debuted in October 2018 and has, since then, produced a somewhat mixed bag performance. In fact, the ETF has never posted a return that beat the average return of the ETFs in its niche category.
AIEQ Has Missed NVIDIA's Historic Bull Run
How ironic
An AI-powered ETF whose holdings are chosen by a quantitative model running on IBM Watson has excluded $NVDA from its portfolio, with disastrous results pic.twitter.com/zgOunwkkOb
— Julian Klymochko (@JulianKlymochko) June 28, 2024
A cursory view of AIEQ's holdings presents a conundrum of sorts: an ETF that is wholly powered by artificial intelligence simply refuses to buy the stock that has become virtually synonymous with the ongoing all-things-AI mania - NVIDIA. In fact, Meta, Netflix, and Microsoft currently constitute the ETF's biggest holdings.
And the results of this decision are plain to see. The AI Powered Equity ETF has posted an year-to-date return of -1.65 percent vs. the S&P 500's 15.98 percent gains so far this year. Of course, this outcome is hardly surprising given the fact that NVIDIA alone has contributed a whopping 30 percent of the S&P 500's year-to-date gains!
There is a contrarian angle to AIEQ's obstinacy, however. The ongoing market rally is reliant on an increasingly narrow base of stocks, with NVIDIA constituting a veritable cornerstone. Consider the fact that the equal-weight S&P 500 index is up just 4.29 percent so far this year. In this environment, a deeper correction in NVIDIA shares can significantly erode the S&P 500's year-to-date gains and provide an opportunity to the AI Powered Equity ETF to outshine its competitors. The only question is: will we get such a correction this year?
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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