AI ETFs Just Got More Selective: Defiance's AIHY Bets Only on AI Hyperscale Winners
Defiance ETFs has expanded its artificial intelligence lineup with the launch of a new fund the issuer says is the first ETF focused on companies that are scaling AI profitably across key segments.
the Defiance AI Hyperscale Leaders ETF (NASDAQ:AIHY) is focusing on compute infrastructure, cloud platforms, semiconductors, AI software and model deployment infrastructure.
Key Features of AIHY
- Objective: Long-term capital appreciation through exposure to AI hyperscale leaders
- Investment universe includes: AI compute infrastructure, cloud platforms, emerging AI-native cloud providers, data centers, AI model deployment infrastructure, AI model and ecosystem development, semiconductors, and AI-related software platforms
- AI exposure requirement: At least 50% of a company’s revenue, assets, capital expenditures, or research and development spending must be tied to AI infrastructure, platforms, models, semiconductors, or AI-related software
- Financial screens: Revenue growth must outpace operating expense growth, with positive year-over-year revenue growth and positive gross profit margins based on the latest reported results
- Positioning: Targets companies scaling AI profitably rather than firms with only a broad AI association.
- Top Holdings: Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL), Space Exploration Technologies Corp (NASDAQ:SPCX).
- Weightage details: The top 5 holdings constitute about 91% of net fund assets.
- Expense ratio: 0.76%
The launch comes as investor scrutinize which companies are translating heavy AI spending into sustainable earnings growth. Rather than offering broad exposure to firms with AI ambitions, AIHY applies a rules-based screening process to identify what Defiance calls “AI Hyperscale Leaders”—companies that derive a meaningful portion of their business from AI while demonstrating improving operating leverage and profitability.
According to Defiance ETFs Chief Investment Officer Sylvia Jablonski, AIHY is designed to hold companies to measurable financial standards, including substantial AI exposure, revenue growth outpacing operating expense growth, positive year-over-year revenue growth, and positive gross margins, with the goal of capturing businesses best positioned as the AI infrastructure buildout continues.
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