AI Index Outpaces Markets in 2025 as Global Investment Surges Past US$250 Billion
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The Morningstar Global Next Generation Artificial Intelligence Index has posted a 29.33 percent return year to date as of September 9, 2025, outperforming broader market benchmarks amid ongoing advancements in artificial intelligence technologies. This highlights AI's prominence in investment landscapes, fuelled by innovations in generative models and supporting infrastructure.
Index Background
The Morningstar Global Next Generation Artificial Intelligence Index, launched on August 29, 2023, tracks companies leading in AI development across global markets. It emphasises four main categories: generative AI, data and infrastructure including semiconductors and data centres, software for improved user experiences and efficiency, and services like AI consulting. The index maintains at least 80 percent exposure to generative AI themes at each rebalance, offering focused access to evolving tech trends. Investors can gain exposure through the Invesco Morningstar Global Next Gen AI Index ETF, which mirrors the index's composition.
Performance Details
The index's 29.33 percent gain as of September 9, 2025, compares favourably to the 11.75 percent return of the Morningstar US Market Index over the same timeframe, reflecting AI's momentum in a tech-driven year. Current top holdings by weight include Nvidia, Microsoft, Amazon, Broadcom, Meta, Alphabet, Taiwan Semiconductor Manufacturing, Oracle, Advanced Micro Devices, and Tencent, spanning sectors from chip manufacturing to cloud computing and social platforms. Several constituents, such as Microsoft, Taiwan Semiconductor, Alibaba, Tencent, Adobe, Cognizant Technology Solutions, and EPAM Systems, were rated as undervalued by Morningstar analysts as of early September.
Drivers Behind the Growth
Growth stems from widespread AI integration, with generative AI drawing US33.9 billion dollars in global private investment in 2024, an 18.7 percent rise from the previous year. Progress in AI models has accelerated, closing gaps between leading developers in the US and China while mastering benchmarks more swiftly. Microsoft, for instance, saw Azure cloud services revenue grow 33 percent year over year in its fiscal 2025 first quarter, driven by AI demand. Taiwan Semiconductor benefits from surging needs for advanced semiconductors in computing, while firms like Tencent and Alibaba apply AI to enhance e commerce and content delivery.
Economic Impacts
Global corporate AI investment hit a record US252.3 billion dollars in 2024, with private funding up 44.5 percent year over year. This capital surge is anticipated to generate seven trillion dollars in value from generative AI, lifting US labour productivity by 0.5 to 0.9 percent annually through 2030. AI may reshape 54 percent of jobs moderately, addressing skill shortages but sparking debates on task automation. Leading companies including Microsoft, Alphabet, Amazon, and Meta forecast up to 364 billion dollars in combined capital expenditure for 2025, largely for AI initiatives, rising from prior estimates around 325 billion dollars.
Future Outlook
AI is poised for further embedding in industries, with models expanding in scale and functionality. Focus shifts to AI-native businesses with stable revenue models amid market variability. Developments in reasoning, custom chips, and cloud operations are likely to boost demand for semiconductors and hyperscaler earnings. Challenges include intensifying competition from Chinese developers, potential tariffs, and semiconductor market cycles, which might moderate progress if broader economic pressures emerge. The sector appears set for continued attention, contingent on balancing innovation with regulatory and ethical considerations.
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