Global assets in artificial intelligence (AI) and so called Big Data funds have surged more than sevenfold over the past five years, reaching $38.1bn (£28bn) by the end of the first quarter, as investors have flocked to these sectors.
Perhaps surprisingly, Europe is the largest market for AI & Big Data funds – having grown five-fold to reach a record $23.1bn (£17bn) by the end of 2024 and now representing two-thirds of global assets, according to data published by Morningstar.
Although nearly all the most frequently held AI and Big Data stocks globally are US-listed and domiciled, underscoring the United States’ leadership in the technology sector.
“It’s hard to overlook the dominance of the Magnificent Seven among the most widely held stocks,” said Kenneth Lamont, principal for manager research at Morningstar.
In fact, of these names, only Tesla was held by fewer than half of the AI and Big Data portfolios.
Meanwhile, Nvidia appeared in nearly nine out of every ten AI & Big Data funds.
While the long-term impact of AI is widely recognised, the leaders of today may not hold their positions tomorrow, added Lamont.
“Take Nvidia, for example. Its stock price tumbled in early 2025 when valuation assumptions were challenged after the emergence of Chinese start-up DeepSeek, illustrating how quickly the landscape can shift,” Lamont said.
And while AI and Big Data funds have also grown significantly in number and size, the definitions of the AI theme vary greatly, leading to diverse strategies and performance outcomes.
“This inconsistency poses a challenge for investors seeking precise, targeted exposure to AI,” added Lamont.
Chasing the next hot investment theme can often led to disappointing outcomes for investors.
However, adopting a contrarian, valuation-aware approach can help mitigate these risks, noted Lamont.
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