Tap S&P 500 ETFs as AI-Led Dominance Likely to Continue

According to JPMorgan Asset Management’s recent 2025 Long-Term Capital Market Assumptions, U.S. companies are expected to maintain their lead in global equity market share, even as their share falls slightly from 64% to 60% by 2037, as quoted on Yahoo Finance.This continued dominance is attributed largely to advancements in artificial intelligence (AI). The report, unveiled recently, predicts that AI will drive revenue growth and margin improvements across various industries, extending beyond Big Tech to sectors like Utilities and Energy.AI’s Reach Beyond Big TechMonica Issar, JPMorgan’s Global Head of Multi-Asset and Portfolio Solutions, explained in a media roundtable that AI’s influence will increasingly spread across multiple sectors. As companies like NVIDIA NVDA supply AI chips to tech firms, industries supporting AI’s energy and power demands — such as Utilities XLU and Energy XLE — stand to benefit from increased spending.This broader adoption of AI is expected to contribute to revenue and efficiency gains, ultimately boosting profit margins across the board. Investors should note that the growing adoption of AI will keep on benefiting mining companies, too.Many have pledged to use renewable energy to power their data centers, driven by sustainability goals, and they are increasingly exploring nuclear energy for their power needs. This is benefiting exchange-traded funds (ETFs) like The Sprott Uranium Miners ETF URNM (read: Uranium ETFs Surge as Big Tech Powers Up With Nuclear Energy).The huge demand for artificial intelligence (AI) is also expected to boost copper demand, benefitting ETFs like The GlobalX Copper Miners ETF COPX (read: Top Investment Strategies for the Second Half).Will AI Efficiency Drive S&P 500’s 10% Annual Returns?Issar pointed out that AI will make companies more efficient by automating simple tasks and reducing costs. The anticipated rise in efficiency is predicted to bolster profit margins. Although Europe is beginning to adopt similar technologies, the United States is expected to maintain its leadership in AI innovation, at least in the medium term.Nicholas Colas, co-founder of DataTrek Research, suggests that the United States’ role in AI adoption positions it to remain a global leader. In a recent research note, Colas projected that the S&P 500 could see more than 10% annual returns over the next decade, fueled by the U.S. tech dominance.He added that the odds of a non-U.S. company surpassing giants like Apple, NVIDIA, Microsoft, Amazon, Alphabet and Meta are “almost zero,” as quoted on Yahoo Finance. Colas went on to explain that given the strong venture capital ecosystem of the United States, new tech giants are expected to emerge from the United States and contribute to the S&P 500’s future returns.Any Wall of Worry?Concentration risk is a key concern. Note that much of this year's 23% rally has been focused on a few large technology companies, suggesting limited breadth in the market recovery. But then, JP Morgan’s latest report suggests that the AI-driven boost and that high concentration in big techs will keep driving the S&P 500 over the medium term.What Lies for the S&P 500 in the Near Term?The latest Bloomberg Markets Live Pulse survey revealed that investors expect the U.S. equity rally to extend into the final stretch of 2024. Banks and other Finance sector companies gave a good start to the Q3 earnings season.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The winner of the U.S. presidential election and the Fed’s forward monetary policy will also play a role in predicting the fate of the S&P 500. Even if the gains do not match those of the past decade, the expected gains should not be minuscule, given the current condition of the U.S. economy.S&P 500 ETFs in Focus Against this backdrop, below we highlight a few S&P 500-based exchange-traded funds (ETFs) that could be good long-term plays. These ETFs include SPDR S&P 500 ETF Trust SPY, iShares Core S&P 500 ETF IVV, Vanguard S&P 500 ETF VOO,     SPDR Portfolio S&P 500 ETF SPLG and Invesco S&P 500 Equal Weight ETF RSP.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis Report SPDR S&P 500 ETF (SPY): ETF Research Reports Energy Select Sector SPDR ETF (XLE): ETF Research Reports Utilities Select Sector SPDR ETF (XLU): ETF Research Reports Vanguard S&P 500 ETF (VOO): ETF Research Reports Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports iShares Core S&P 500 ETF (IVV): ETF Research Reports Global X Copper Miners ETF (COPX): ETF Research Reports SPDR Portfolio S&P 500 ETF (SPLG): ETF Research Reports Sprott Uranium Miners ETF (URNM): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks