The artificial intelligence (AI) market has been experiencing remarkable growth in recent years, driven by significant advancements in large language models and increased compute power. Experts believe we are witnessing the biggest technological shift since the internet's inception. For investors looking to capitalize on this long-term opportunity, investing in a well-chosen exchange-traded fund (ETF) focused on AI could be a strategic move.

One standout option within the AI ETF landscape is the Xtrackers Artificial Intelligence and Big Data ETF (XAIX). This fund tracks the Nasdaq Global Artificial Intelligence and Big Data Index, which has a unique strategy in AI investing. Unlike other funds, which add companies to their portfolios after classifying them as AI-driven, this ETF aims to identify businesses that are embracing AI before they are widely recognized as such. The ETF's portfolio includes well-known AI names such as Nvidia and Oracle, alongside companies rapidly integrating AI into their operations, like Bank of America.

Although not an obvious AI player, Bank of America is the fund's fourth-largest holding with a portfolio weighting of 4.6%. The bank has secured nearly 1,100 AI and machine learning patents and invested over $12 billion in technology, with a significant portion dedicated to AI initiatives. This strategic approach allows Xtrackers ETF to potentially benefit more from the AI revolution than traditional finance-focused peers may anticipate.

Other notable companies in the portfolio include Adobe, Intuit, Verizon, and Toronto-Dominion Bank, all of which are seizing AI-driven growth opportunities despite not being AI-centric companies. Xtrackers stands out by expanding its definition of businesses that may benefit from AI, thereby diversifying its portfolio beyond pure-play AI technology developers. Notably, this openness to include firms investing heavily in AI solutions is a critical differentiator from other AI ETFs that concentrate strictly on technology creators.

However, investors should consider a few key points before purchasing shares of this ETF. Primarily, reviewing the expense ratio is essential; the Xtrackers Artificial Intelligence and Big Data ETF has an expense ratio of 0.35%. While higher than some straightforward index funds, it's relatively competitive among other AI-focused ETFs like the Invesco AI and Next Gen Software ETF, which charges 0.6%.

Another factor to weigh is the ETF's performance: its value has more than doubled since the start of 2023. Yet, investors should be cautious, as past performance doesn't ensure future results, especially given today's AI boom. While AI innovation and related demand are expected to surge over the next decade, such mega-trends can be subjected to short-term price fluctuations. Those considering investing in the Xtrackers Artificial Intelligence and Big Data ETF should adopt a long-term outlook and prepare for potential volatility, mirroring other high-growth sectors.