Most Australian investors don't own the four strongest AI stocks: Global X ETFs

Spending on AI-related software and hardware is soaring and Alibaba has been one of the world’s top-performing stocks this month, along with a select group of AI leaders, Oracle, Broadcom and Alphabet. However, most Australian investors are not invested in these AI stocks, according to Billy Leung, Global X ETFs Senior Investment Strategist.

“With much of the media coverage focused narrowly on the US hyperscalers, it is worth noting Alibaba’s outsized contribution to September’s global share market rally,” said Leung.

“Alibaba shares have jumped 31% over the month to September 15, making the company China’s favourite investment, and the Hang Seng’s strongest, as investors react positively to the e- commerce giant’s aggressive investment in artificial intelligence, including the development of a computer chip designed to replace those made by Nvidia to run AI-models,” Leung said.

“In the US, we have also seen Broadcom shares surge around 19% over the month to September 15, along with Oracle and Alphabet. Broadcom is up an astounding 120% in total returns over the past year to September 15, compared to Nvidia’s 49% over the same period, and for good reason; it is estimated that more than 99% of all internet traffic crosses at least one Broadcom chip; Broadcom connects everything; it has emerged as a key enabler with switch silicon and networking chips critical to hyperscale AI clusters.

“Alphabet too is accelerating monetisation through Gemini and AI-native search, with analysts lifting earnings forecasts as cloud margins improve. Together with Nvidia, which remains the cornerstone of AI computing, these companies showcase how the AI cycle is moving through hardware, infrastructure and software sectors all at once. Yet most Australian investors do not have these important companies in their portfolios.

“It’s time for Australian investors to ask themselves, can they keep ignoring significant growth in these global AI market leaders? The answer to that question could be no. For wealth generation, an exposure to these five companies could be a key step towards creating significant wealth over the long term,” Leung said.

Alibaba is the best performer on the Hang Seng Tech Index in September after announcing an AI-related revenue boost for the June quarter and a significant expansion of its cloud business.  The company recently reaffirmed a three-year Rmb380 billion (US$53.4 billion) AI capex target, with AI contributing close to a fifth of external cloud revenue and compounding at triple-digit rates, according to Leung.

“At the same time, Alibaba is embedding AI tools across its multiple platforms, from e-commerce, logistics, mapping and workplace apps. That’s a scale story the market hasn’t fully priced into its shares,” Leung said.

One exchange traded fund (ETF) on the ASX offers access to the breadth of these companies is the Global X Artificial Intelligence ETF (GXAI), which has gained 35% over the year to September 15, compared to a gain of 14% for the S&P/ASX 200 in total returns, and similarly, 20% for the S&P 500 and 28% for the Nasdaq Composite Index in AUD terms.  Its top holdings are Oracle, Alibaba, Broadcom and Alphabet, and the fund also invests in Nvidia, the world’s biggest producer of advanced computer chips and the world’s largest manufacturers of all computer chips, TSMC and Samsung.

“An investment in GXAI could be smart. The AI market is projected to reach US$244.22 billion in 2025 with an annual growth rate (CAGR 2025-2031) of 26.6%. Reflecting strong expectations, many analysts have been upgrading their price targets for Alibaba since its recent 2Q earnings report, with its share seen rising 5% in the coming year from Monday’s close to HK$162.43, according to Bloomberg.

“Artificial intelligence spans multiple segments, and its most important enablers include these five companies and other digital enables from around the world. GXAI invests accordingly and is unconstrained with respect to sector and geography, aiming to create wealth from the quickly expanding AI sector and AI adoption,” Leung added.

“By 2031, it has been projected that around 1.1 billion people worldwide will be using AI tools directly, a massive increase from roughly 350 million users in 2025. The latest forecasts keep rising as AI adoption accelerates, transforming daily living, work, and society for an increasing proportion of the world’s population.”