Assets in AI and big data funds reached record $38.1bn in Q1 2025
Global assets in artificial intelligence (AI) and big data funds have surged more than sevenfold over the past five years, reaching $38.1bn by the end of Q1 2025, Morningstar’s report on investing in AI with funds has revealed.
Record inflows in the first quarter of 2025 were attributed to a growth in interest from Chinese investors, buoyed by the success of domestic underdog DeepSeek. However, nearly all of the most frequently held AI and big data stocks globally are US-listed and domiciled, underscoring the US’ leadership in the technology sector.
Unsurprisingly, the magnificent seven dominate the most frequently held stocks. According to Morningstar, this causes a headache for fund managers tracking the theme and fund selectors integrating funds into broader investment portfolios. Additionally, there are no clear options for non-US-focused exposure.
However, Europe was found to be the largest market for AI and big data funds, having grown fivefold to hover near record highs of $22.7bn by the end of May 2025.
“It’s hard to overlook the dominance of the ‘magnificent seven’ among the most widely held stocks. 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 10 AI and big data funds,” said Kenneth Lamont, principal for manager research at Morningstar.
“While the long-term impact of AI is widely recognised, the leaders of today may not hold their positions tomorrow. 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.”
A ‘high-risk’ investment space
Underpinned by the most frequently held AI stocks, the consensus-based Morningstar Global Artificial Intelligence & Big Data Consensus outperformed the Morningstar Global Target Market Exposure Index by 35% since the launch of ChatGPT 3.5 in November 2022.
However, this outperformance was accompanied by higher volatility and deeper drawdowns, reflecting the higher-risk nature of investing in emerging, high-growth technologies. Chasing the next hot investment theme often led to disappointing outcomes for investors, but adopting a “contrarian, valuation-aware approach” can help mitigate these risks, Morningstar said.
“AI and big data funds have grown significantly in number and size. Yet, their definitions of the AI theme vary greatly, leading to diverse strategies and performance outcomes,” added Lamont. “This inconsistency poses a challenge for investors seeking precise, targeted exposure to AI.”