Broadcom and OpenAI Partnership Enhances AI Growth Potential: Spotlight on Tech ETFs

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OpenAI has signed a multi-year contract with Broadcom to deploy 10 gigawatts of custom AI accelerators, marking its fourth major deal with chipmakers in 2023. This development highlights the ongoing demand for AI infrastructure as OpenAI positions itself to support the growing industry.

The overall market sentiment regarding the AI boom is divided. While some experts, including economist Steve Hanke, suggest a potential “AI bubble burst,” others, such as Allianz’s chief economist Ludovic Subran, view the current economic landscape as one driven by fundamentals rather than speculation. OpenAI’s agreements, which have a combined capacity spending potential exceeding $1 trillion, suggest substantial industrial commitment to AI development.

Investors are advised to consider AI-focused Tech Exchange-Traded Funds (ETFs) as an effective risk mitigation strategy amidst concerns of market concentration among a few major tech companies known as the “Magnificent Seven.” These ETFs, such as iShares U.S. Technology ETF (IYW) and Roundhill Generative AI & Technology ETF (CHAT), provide diversified exposure and have shown year-to-date gains of 23.7% and 58.3%, respectively.

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