AI fever ignites a boom in thematic ETFs as fund managers hunt for their next big hit

By Christine Idzelis

It's been a rocky October for the AI trade, putting a dent in big gains so far this year

Robotics ETFs are increasingly coming to the stock market, with AI being a dominant investing theme in 2026.

The runaway success of the artificial-intelligence trade has left investors hungry for the next big market theme. Wall Street fund managers are happily obliging with a flurry of new targeted products, helping investors invest in everything from the rise of robotics to the incipient space economy.

Thematic ETFs are booming in 2026, as asset managers have launched new products at a breakneck pace. The popularity of funds like the Roundhill Memory ETF DRAM, which invests in memory stocks as a subsector of technology and quickly gained traction because they're an important part of the AI trade, has inspired something of a gold rush in the space, as fund companies cast about for the next big hit.

Niche subdivisions of the AI theme have proved particularly popular, as fund managers have launched products tied to everything from AI lab ecosystems to shares of optical companies expected to benefit from the ongoing AI investment boom. Cybersecurity, robotics and defense have been other popular themes.

"AI is the dominant theme," said Bryan Armour, director of ETF and semiliquid fund research at Morningstar, in a phone interview. "What we're seeing in 2026 is product development that refines some of those exposures," he said, from AI Labs to robotics including humanoids.

So far, 73 thematic ETFs have launched this year in the U.S., an 87% increase from the 39 launches seen in 2025, according to data from Morningstar. But the boom in new products is also dredging up some uncomfortable memories: The previous peak for thematic ETF launches arrived in 2021, as the COVID-era market mania was reaching its crescendo.

 
Thematic ETF launches are surging in 2026 
Year                                          Launches 
2020                                          49 
2021                                          90 
2022                                          59 
2023                                          40 
2024                                          25 
2025                                          39 
2026                                          73 
Source: Morningstar data as of Oct. 19, 2026 

While broad index funds like the State Street SPDR S&P 500 ETF SPY continue to dominate the league tables of products with the most assets under management, the growth in the thematic space suggests investors are increasingly fixating on a more specific opportunity set.

Over the past couple of years, AI has become more influential as an economic force. Economists now say aggressive investment in new data centers is largely responsible for a pickup in the pace of GDP growth.

"This is one of the biggest themes in a generation," said Jay Jacobs, U.S. head of equity ETFs at BlackRock, in a phone interview. "If you look at what's driving the markets, AI is up there with GDP growth and interest rates as one of the biggest factors."

BlackRock listed on Wednesday the iShares Future Robotics and Related Technologies Active ETF RBTX, which actively invests in stocks in categories such as humanoids, industrial automatization, autonomous vehicles, and space and defense, according to Jacobs.

"This is really looking out at what the next major development could look like in the artificial-intelligence space," he said. "The next phase is really AI entering the physical world."

It's hardly the first robotics-focused product to launch this year. Indeed, it has been a particularly popular theme, according to Aniket Ullal, head of ETF research and analytics at CFRA Research. A handful of products have launched in recent months, including the Tuttle-Rareview Humanoid Robotics ETF HOID, which began trading earlier this month.

"People are trying to disaggregate the AI theme," Ullal told MarketWatch by phone.

AI labs, space, cybersecurity

A bunch of AI-lab ETFs recently arrived to the market, including one centered around OpenAI, the creator of ChatGPT, which had helped popularize artificial intelligence after it was introduced to the public in late 2022.

Harbor Capital Advisors launched the OpenAI Lab Ecosystem ETF OAIW in August, along with the Anthropic AI Lab Ecosystem ETF ANTW, Meta AI Lab Ecosystem ETF MTAW, the Google DeepMind AI Lab Ecosystem ETF DEPW and SpaceXAI Lab Ecosystem ETF XAIW.

"The ecosystem is built around these frontier-model developers," said Armour. "They're like company-specific AI labs," with the ETFs holding shares of their partners or backers, he said.

As AI is maturing, many investors want to trade more precisely around the winners and losers as they shake out, according to Matthew Tuttle, CEO of Tuttle Capital Management.

For example, he pointed to the Roundhill Memory ETF, which launched in early April, as "a perfect product at the perfect time," during a phone interview with MarketWatch. The fund was the first ETF to focus on high-bandwidth memory stocks, providing exposure to the "biggest of the bottleneck trades" in AI, including shares of South Korean companies that U.S. investors couldn't easily buy at the time, he said. "Now what you're seeing, everyone is trying to come up with the next DRAM," said Tuttle, referring to the ETF's ticker.

Since then, he has launched other products offering exposure to the ongoing data-center buildout. In May, his firm launched the Tuttle Capital Pure Play Photonics ETF FOTO, which provides exposure to stocks involved in using laser light in optical fiber instead of copper wire for AI data centers. That same month saw the listing of the Corgi Lithography & Semiconductor Photonics ETF EUV, which Morningstar categorizes under the AI and Big Data theme.

Corgi has launched a flurry of ETF products this year, including a number of thematic funds, like the Corgi Robots & Humanoids ETF CBOT, Corgi Space & Satellite Communications ETF DIPR, Corgi Data & Surveillance ETF EYES, and Corgi AI Cybersecurity ETF XA, according to Morningstar data. Space, another popular theme, has been supercharged by the IPO of Elon Musk's SpaceX in June.

Cybersecurity has also been a big theme, as frontier AI models have seen their capabilities quickly advance. A few high-profile incidents where autonomous AI agents broke out of their sandboxes and infiltrated third-party systems have helped to underscore its importance.

The First Trust Nasdaq Cybersecurity ETF CIBR, which launched in 2015, is currently the biggest cybersecurity product in ETF land. It had $17 billion under management at the end of September, according to Morningstar data.

The AI trade's volatile October

It's been a rocky October for the AI trade as investors question the return on investment from companies doing a heavy amount of spending and borrowing relating to AI to support the buildout of the technology's infrastructure. Still, AI-related stocks have broadly seen big 2026 gains.

Among ETFs that invest in the broad theme, the iShares A. I. Innovation and Tech Active ETF BAI is up more than 21% in 2026 despite tumbling more than 14% this month through Friday. Similarly, the Global X Artificial Intelligence & Technology ETF AIQ has jumped more than 22% so far this year, although the fund had a much smaller October loss, of more than 4% through Friday, according to FactSet data.

AI is attracting heightened focus lately, after SpaceX (SPCX) reported third-quarter earnings on Oct. 20, and Facebook parent Meta Platforms (META) and Tesla (TSLA) each released quarterly results the following day. Next week brings highly anticipated results from other Big Tech companies involved in AI, including Google parent Alphabet (GOOGL) (GOOG).

With investors now getting access to many different funds with more precise exposures to AI, it's important to remember amid excitement over the transformative technology that "price matters" when identifying investing opportunities in the stock market, Armour cautioned.

"There's so much projection in valuing AI companies," he said, "that it makes it really hard to know whether you're still coming in before the full wave or if you're buying in on the crest."

Bull market for stocks

That S&P 500's strong run in 2026 and in each of the past three years appears to have set the stage for this year's jump in thematic ETFs, as investors sift through ways to sharpen their investing approach in the current bull market for U.S. stocks. The previous thematic ETF boom in 2021 - which Armour said was fueled in part by strategies around environmental, social and governance criteria known as ESG that included clean energy - also coincided with a strong bull market.

In 2021, the S&P 500 SPX booked its third consecutive year of double-digit percentage gains, before slumping 19.4% in 2022 to book its worst performance since 2008, according to FactSet data. The pace of thematic ETF launches fell off significantly in 2022.

AI has been a significant tailwind for the market this year, despite some concern over higher financing costs following a jump in bond yields and as many investors expect the Federal Reserve to raise interest rates again by year's end. The Fed had been raising rates aggressively in 2022, the year the U.S. stock market slumped, in an effort to battle soaring inflation.

Today, inflation remains elevated, albeit well below levels seen in 2022, prompting the Fed to hike its policy rate in September. The S&P 500 has climbed 11.4% this year through Friday, ending 2.5% below its record closing high booked Oct. 6, according to Dow Jones Market Data.

"When the stock market is particularly strong, then thematic funds tend to follow," said Armour. "When everything seems to be working, it's a lot easier to take on risk."

-Christine Idzelis

(MORE TO FOLLOW) Dow Jones Newswires

10-24-26 0800ET