By Adam Levine

The AI trade is back, if the GlobalX Artificial Intelligence & Technology exchange-trade fund is any indication. To start 2025, the ETF's price was down 18%, but since April 8 it is up 37%, closing at an all-time high of $43.10 on Tuesday.

The ETF has 85 component stocks, ranging from Tencent Holdings, which comprises 3.9% of the fund, down to Soundhound AI, which makes up just 0.2%. Among the fund's holdings, the big movers since April 8 have been Palantir, Oracle, and Broadcom, with their stocks up 81%, 66%, and 63%, respectively.

The moves are indicative of AI sentiment in 2025 and shifting macroeconomic winds. The AI trade -- buying stocks linked to the AI data center investment boom -- was all the rage in 2024. The leader in this space, Nvidia, saw its shares rise by 171% that year. However, the mood shifted in January 2025, when the Chinese firm Deepseek unveiled its chatbot that reset expectations around the cost of AI models and the investment required.

All of a sudden, what looked like a low-risk bet in December -- continued accelerating investment in AI data centers -- became less certain in January.

By April 8, Nvidia shares were down 28% on the year, but have gained 54% since then. What changed was a macroeconomic shift: On April 9, President Donald Trump announced that he was backing off the worst of the very high tariffs that he had announced the previous week. Stock prices rebounded generally, with the S&P 500 index up 21% since April 8.

The January fears that the AI data center investment boom could be drawing to a close have subsided. Big Tech companies, such as Amazon, Microsoft and Meta Platforms, reiterated their ambitious capital spending plans during first quarter earnings calls in April and May, signaling that AI winners like Nvidia could keep growing quickly -- pushing the the GlobalX Artificial Intelligence & Technology ETF even higher.

"The pace of progress across the industry and the opportunities ahead for us are staggering. I want to make sure that we're working aggressively and efficiently," said Meta CEO Mark Zuckerberg on the company's first-quarter earnings call. "To that end, we are accelerating some of our efforts to bring capacity online more quickly this year as well as some longer-term projects that will give us the flexibility to add capacity in the coming years as well. And that has increased our planned investment for this year."

It was music to the ears of AI investors.

Write to Adam Levine at adam.levine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 24, 2025 18:11 ET (22:11 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.