Bloomberg Global AI Index Surged 118% in 2024 as AIQ Nears Peak Amid Sector Divergence

The Quick Take

• The Bloomberg Global AI Index surged 118% in 2024, reflecting the extraordinary market revaluation of AI-exposed equities
• The AIQ ETF, tracking a broad basket of AI companies, approached a peak amid signs of market divergence within AI subgroups
• Market divergence within AI — between semiconductor leaders and software/application companies — signals selective rotation within the theme

The Bloomberg Global AI Index delivered a 118% return in 2024, according to GuruFocus, reflecting the extraordinary revaluation of AI-exposed equities following the ChatGPT-driven AI adoption cycle. The AIQ ETF, which tracks a global basket of companies with significant AI revenue or AI-driven business model exposure, was approaching a peak level amid signs of internal market divergence — a pattern where different subsectors within the AI theme are increasingly decorrelating in performance.

The 118% annual gain in the Bloomberg AI Index dramatically outpaced broad equity indices and validates the thesis that AI infrastructure and enablement companies captured disproportionate economic value from the AI investment cycle. However, the emerging divergence signal is critical for portfolio construction: semiconductor companies like NVIDIA, Broadcom, and TSMC — which supply the physical compute for AI — have driven the bulk of returns, while AI software and application companies have shown more uneven performance. This bifurcation suggests the market is becoming more selective about which part of the AI value chain it wants to own at current valuations.

Watch for any further market divergence between AI semiconductor names (NVDA, AVGO, AMD) and AI software/application companies (MSFT Copilot, Salesforce AI, ServiceNow) as the key valuation signal for the theme's next leg. The macro variable is capital expenditure by hyperscalers (Amazon, Google, Microsoft, Meta): sustained or rising AI capex commitments would support semiconductor demand while potentially cannibalising third-party AI software demand as cloud providers build their own AI capabilities in-house. An AIQ pullback from the current peak would suggest macro risk-off is beginning to hit the theme.

Synthesized from 1 source.