Roundhill Investments launches first ever generative AI ETF, signaling growing prominence in enterprise software

Roundhill Investments has launched what it’s calling the first ever U.S. exchange-traded fund (ETF) explicitly focused on generative AI, a technology that analysts say has the potential to reshape entire industries.

The Roundhill Generative AI & Technology ETF, also known by its stock ticker “$CHAT,” began trading on the New York Stock Exchange this morning. The actively-managed fund gives investors exposure to companies developing generative AI and related technologies.

“The progress that ChatGPT has had has really brought generative AI  into the mainstream,” Roundhill Investment’s chief investment officer Tim Maloney said in an interview with VentureBeat. “The growth in user base and in public awareness for generative AI and ChatGPT has been tremendous. We haven’t seen anything really like it in recent history, or history generally.”

“If you look at corporate executive discourse, artificial intelligence is now being talked about, so far in 2023, more than cloud computing in earnings transcripts and other corporate presentations,” Roundhill Investments director of research Matthew Kanterman said. “So it underscores that this is where consumers are focused. If you look at Google Trends, or where corporate executives are focused, this is the next big thing.”

A major milestone for the generative AI industry

Already, some generative AI applications are demonstrating real-world impact. OpenAI’s ChatGPT has attracted over 100 million users and is being integrated by businesses to improve processes like writing and coding software.

The launch of the CHAT ETF indicates generative AI is moving from a niche technology into the mainstream. Analysts at Goldman Sachs estimate AI overall could drive $7 trillion in economic growth over the next seven years through increased productivity.

Roundhill pegs the potential market for generative AI enterprise software at $120 billion. But until now, few options existed for investors wanting exposure to the nascent sector.

“We estimate the total addressable market just for enterprise software applications from generative AI at over $120 billion in a decade, and we get there just thinking about how rapidly we think the technology can penetrate every corner of enterprise software, the growth of the overall software market, and the uptake of these applications over time,” Kanterman said.

The launch of the CHAT ETF signals that generative AI has reached an inflection point — growing rapidly enough to warrant its own investment vehicle, but still poised for faster adoption and growth in the coming years. With the potential to transform creative fields, business processes and more, generative AI may be entering a milestone phase that could shape our economies and societies for decades.

“When you think about the ability for this to be a multi-trillion dollar economic transformation,” Kanterman added, “and represent a multi-billion dollar addressable market, just for enterprise, let alone getting into consumer applications, you know, it really starts to get exciting.”