Can an AI ETF Outperform the S&P 500 in 2026?
If you’ve watched the S&P 500 grind higher this year, you might be wondering whether it’s worth chasing the same old index — or if a newer, sharper option could beat it. One contender making headlines is Dan Ives’ Wedbush AI Revolution ETF (IVES), which has just crossed $1 billion in assets only five months after launch. The question is simple: could an AI-focused ETF like this really outperform the S&P over the next 12 months?
Let’s unpack what’s inside IVES, how it compares to rivals, and what kind of investor it might suit.
The Story Behind IVES
The Wedbush AI Revolution ETF (ticker: IVES) is built around the idea that artificial intelligence is still in the early innings of a decades-long transformation. The fund’s underlying index — the Solactive Wedbush AI Index — is drawn from Ives’ proprietary AI 30 Research Report, identifying companies that are either creating, enabling, or deploying AI at scale.
Its top holdings read like a who’s who of the AI supply chain: Nvidia, AMD, Broadcom, Micron, Meta, Palantir, and Tesla. Most sit near the 5% weighting cap, meaning performance is tightly linked to the fortunes of the semiconductor and big-tech space. If Nvidia sneezes, IVES catches a cold.
The fund has rocketed +38% since launch (June 2025) — roughly double the S&P 500’s +15.5% over the same period. That kind of outperformance has drawn in over $665 million of net inflows, pushing total assets past the $1 billion mark.
But momentum and money flows aren’t the same as long-term resilience. To judge IVES properly, it helps to see it alongside other AI-themed funds.
The Competition: AIQ, ROBO, and the S&P 500
| ETF | Cost | Focus | 1-Year Return* | Notes |
|---|---|---|---|---|
| IVES (Wedbush AI Revolution) | ~0.75% | Concentrated U.S. AI leaders | +38% (since launch) | High conviction, high risk, new track record |
| AIQ (Global X AI & Tech) | ~0.68% | Broader, global AI exposure | +35% | More diversified, steadier profile |
| ROBO (ROBO Global Robotics & Automation) | ~0.95% | Robotics & automation tilt | +21% | Global, industrial focus, higher cost |
| VOO (Vanguard S&P 500 ETF) | ~0.03% | Broad U.S. market | +15.5% | Benchmark for comparison |
*Illustrative returns based on recent FactSet and ETF.com data (Oct 2025). Past performance isn’t a guide to future results.
The pattern is clear: AI-centric funds have outpaced the S&P recently, but largely because they’re concentrated in the same handful of mega-cap tech names driving the entire market. That overlap makes them volatile when sentiment cools.
Can IVES Actually Beat the S&P in 2026?
It might — but only if the AI buildout continues at its current pace. Here’s the balance of forces:
Tailwinds
- Global AI spending is forecast to exceed $400 billion by 2027 (IDC).
- Data-centre chip demand from Nvidia, AMD and Broadcom remains intense.
- Earnings from AI-linked companies have consistently surprised to the upside.
Headwinds
- Valuations are stretched: many top names trade on 30–35× forward earnings.
- Any slowdown in cloud or enterprise spending could deflate expectations.
- Broader market rotation into value, cyclicals, or bonds could leave growth ETFs lagging.
So yes — IVES could outperform if AI remains the market’s engine. But if enthusiasm fades, the S&P’s diversified structure will likely prove more resilient.
What Type of Investor IVES Might Suit
IVES isn’t a “set-and-forget” core holding. It’s a satellite position — a way to tilt your portfolio toward a specific theme with higher risk and higher potential return.
It may suit an investor who:
- Already holds a global or S&P 500 fund as a base;
- Wants targeted exposure to the AI megatrend;
- Can tolerate short-term volatility and possible sharp drawdowns.
Think of IVES as the spice, not the main course. For most portfolios, a 5–10% allocation would be considered adventurous but reasonable.
A Quick Scenario
Say you have £50,000 to invest for the next year:
- In the S&P 500, a +10% return leaves you with roughly £55,000.
- In IVES, if AI enthusiasm persists and it returns +25%, you’d see about £62,500.
- But if the theme cools and IVES gains only +5% (or dips), you could end nearer £52,500.
That swing — roughly ±£10,000 — is the price of thematic exposure. The upside can be exciting; the downside can sting.
The Smarter Way to Play It
If you’re drawn to the AI story but prefer something steadier:
- AIQ offers broader exposure across global AI and software names.
- ROBO spreads risk across industrial automation and robotics.
- Or simply hold QQQ or VOO — both still heavily AI-weighted through their top holdings.
Sometimes, diversification is the quietest route to outperformance.
Final thought: The AI trade isn’t over, but it’s no longer early-stage. Funds like IVES could continue to shine — or struggle if growth expectations normalise. Either way, the S&P remains the yardstick every investor eventually measures against.
Written by KyriWealth — independent insights for smarter investors.
Read more at KyriWealth.com
Disclaimer: This content is for informational purposes only and reflects independent market observations. It is not investment advice. Always do your own research or consult a qualified adviser before making financial decisions.
KyriWealth – Prime Access 
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