Billy Leung

Global X ETFs Australia is celebrating five years of its Global X Semiconductor ETF (ASX: SEMI), marking half a decade since it identified semiconductors as a critical investment theme for the next generation of technology.

SEMI has delivered an average annualised return of 33% per annum over a five-year period, making it the best performing ETF in Australia over 5 years.^[1]

SEMI began trading on the ASX on 31 August 2021, more than a year before ChatGPT brought artificial intelligence into mainstream conversation. The fund reflected an early view that semiconductors, not any single AI application, would be the constraint that determined how the technology developed.

Since then, Global X has continued to expand its range of AI-related thematic ETFs as the opportunity has evolved, from the mega-cap technology companies that dominated markets in 2020 to the semiconductors, critical minerals, power and infrastructure needed to build the AI economy today.

“Over five years ago we leveraged our global research to identify semiconductors as an important thematic and SEMI was born. That conviction has played out, with AI moving from an emerging technology to a fundamental driver of global investment,” said Billy Leung, Senior Investment Strategist at Global X ETFs Australia.

“What has changed since August 2021 is the breadth of the investment opportunity. AI is no longer just about the companies building the applications. It is about the entire ecosystem required to make AI possible,” he said.

Six years of AI innovation

Global X Australia’s AI investment journey began with the Global X FANG+ ETF (FANG) in February 2020, providing exposure to the technology giants shaping global markets, including Facebook (now Meta), Amazon, Apple, Netflix and Google (now Alphabet).

SEMI followed in August 2021, targeting the semiconductor companies at the heart of the digital economy.

As the technology matured, Global X broadened its suite of ETFs:

• GMTL – Rare earths and critical metals, launched October 2022
• WIRE – Copper miners, launched November 2022
• ATOM – Uranium and nuclear energy, launched December 2022
• GXAI – Artificial intelligence, launched April 2024
• AINF – Artificial intelligence infrastructure, launched April 2025

The progression reflects how the AI investment opportunity has changed, from the technology platforms of 2020 to the physical infrastructure required to power AI at scale.

“The arrival of ChatGPT in 2022 made AI tangible for millions of people. For investors, it also highlighted how much infrastructure would be required behind the scenes,” Mr Leung said.

“AI needs chips. Chips need critical minerals and manufacturing capacity. Data centres need enormous amounts of power, copper and physical infrastructure. The investment opportunity has broadened dramatically.”

Global X expects the AI ecosystem to continue evolving and will continue looking for opportunities to bring emerging themes to Australian investors.

“Innovation is part of our DNA. We were early to FANG, early to semiconductors and early to the broader infrastructure supporting AI,” Leung said.

“We will no doubt be looking back in another five years and marvelling at the incredible impact that AI has had on capital markets across the globe.”

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Billy Leung

The US technology giants represent some of the strongest growth and quality exposures in global equity markets, with their huge price gains underpinned by strong earnings growth and profitability, according to Global X senior investment strategist, Billy Leung, who says the artificial intelligence (AI) boom is just getting started.

“The US technology giants are exceptionally profitable, with robust margins, scalable business models and strong balance sheets, which could keep getting stronger. On 2026 estimates, Apple and Nvidia are forecast to deliver returns on equity (ROE) of around 175% and 90% in financial year 2025-26, respectively, while Meta, Alphabet, Microsoft and ServiceNow also sit comfortably above the S&P 500 average of roughly 20%,” Leung said, as the chart below highlights.

“Growth expectations tell a similar story. Over the next three years, earnings per share (EPS) for the broader FANG universe is projected to rise faster than the overall market, with chipmakers Nvidia and Broadcom expected to compound at around 35% to 40% a year, while EPS of Netflix, ServiceNow, Microsoft and Amazon forecast to grow in the high teens to low twenties. The group combine structural growth with consistent profitability, which remains rare in global equities,” Leung said.

“Smart Australian investors are buying into this boom, with assets under management (AUM) for Global X’s FANG+ ETF attracting near record inflows of $315 million this year and that is set to surpass total inflows of $349 million in 2024. With total AUM of $1.69 billion as at October 31, including the currency hedged ETF, FANG+ could soon surpass $2 billion in AUM as smart investors buy into the profitability of the US tech giants.

“By maintaining diversified exposure to the most profitable and strategically positioned names in technology, the FANG basket still offers an efficient way for Australian investors to stay invested in the next phase of digital transformation and the AI boom, which has propelled the growth of these US technology giants as they reap revenues unmatched in history,” Leung said.

“Nvidia is the first company ever to surpass US$5 trillion in market capitalisation and recently announced over US$500 billion in revenue from sales of its graphics processing units, which are essential to the processing of AI. Nvidia’s shares have rallied 77% for the six months to October 31^[1], unpinned by its huge profitability and earnings growth.  

“Also last week, Apple’s market capitalisation rose above $4 trillion for the first time, and it overtook Microsoft, after announcing record revenue in the first quarter of FY 2025-26 of just over $1 billion, pushing it shares to a record high of US$277. Alphabet too announced AI-driven cloud boom pushed its quarterly revenue past US$100 billion for the first time. Its shares reached a fresh record high at US$291.59 and have rallied around 70% in six months.

“Global X believes that the AI boom still has more room to run. Hyperscalers’ capital investment has already risen more than 50% this year and is projected to rise again in 2026. That spending is still translating into stronger earnings for these technology giants and could do so for some time yet, so Australian investors could still have time to ride the boom,” said Leung.

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Notes:
[1] https://finance.yahoo.com/news/why-nvidia-nvda-stock-today-192046409.html

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Billy Leung

Global X has launched the Global X Defence Tech ETF (ASX: DTEC), providing Australian investors with access to global companies at the forefront of defence innovation. As global security concerns shift focus onto technology-driven solutions, DTEC offers targeted exposure to key sectors driving the future of defence, including artificial intelligence (AI), drones and cybersecurity.

DTEC aims to track the performance of defence technology sectors by focusing on innovations in security, defence systems and hardware that enhance national safety. The fund maintains a competitive management fee of 0.50% per annum.

The fund has been available in the US under the ticker code SHLD and has gathered more than US$500 million in net assets since listing less than one year ago.^[1]

Investment Strategist, Billy Leung said DTEC’s launch comes at a critical juncture, as geopolitical uncertainty has heightened national security concerns and sparked global defence spending.

“As the global landscape evolves, modern defence planning has shifted towards safeguarding nations through a combination of technology-driven innovations and essential defence infrastructure to enhance protection, intelligence and security. DTEC offers investors access to the sectors leading this transformation, with global defence spending rising at an annualised rate of 4.3%^[2] over the past 40 years.

“We expect this trend to continue amid further geopolitical uncertainty, which is a testament to the sector’s resilience even during economic downturns.

“DTEC offers growth due to its differentiated exposure across various sectors, including industrials, cybersecurity, AI and augmented reality. What is key here is that unlike many civilian markets defence revenues are closely tied to military needs. This gives the defence sector a level of resilience and less correlation with general economic cycles, positioning DTEC as an attractive option for investors seeking capital growth,” Billy said.

DTEC expands Global X’s ETF lineup in Australia to 41 across core, thematics, commodities, income and cryptocurrency. Global X now holds more than $8 billion in assets under management in Australia and over US$85 billion globally.^[3]

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Notes:
[1] As of 30 September 2024.
[2] Stockholm International Peace Research Institute, US Department of State.
[3] As of September 2024.
[4] As of May 2024.
[5] As of March 2024.

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