Apr 21, 2025 Equity
It’s hard to believe it has been just a couple of years since the release of ChatGPT ignited a generative AI revolution. Since then, surging AI optimism has catalyzed massive investment in AI infrastructure. AI is a powerful mega force with the potential to reshape the economy on a scale comparable to the industrial revolution or rise of the internet. A range of companies are leading this transformation, hailing from various layers across the “AI tech stack” which includes infrastructure, intelligence, and Apps & Services.
Each layer of the tech stack plays an important role in AI’s emergence, and presents different opportunities for investors. To delve deeper into each of these layers, we profile three companies currently held in the iShares A.I. Innovation and Tech Active ETF (BAI).
Source: BlackRock, as of April 2025.
Image description: Illustration showing the different layers of the AI tech stack across Infrastructure, Intelligence, and Apps & Services.
Infrastructure is a critical component of the AI tech stack, serving as the physical foundation for AI compute used in training large language models and inference. “As AI models become exponentially more complex, annual investment into AI data centers and their chips could surpass U.S. $700 billion by 2030, equivalent to 2% of annual U.S. GDP.1
As a designer and manufacturer of lasers, optical instruments, and photonic products, Coherent (1.55% exposure in BAI)2 provides solutions for a range of industries including semiconductors and materials processing. Coherent plays a particularly crucial role in AI data centers by providing advanced optical communication technologies, like transceivers. These technologies are essential for the high-speed data transfer needed in AI data centers, as huge amounts of data need to rapidly move between servers and computing nodes.3 Just 20 years ago, the maximum speed of transceivers was 10gbps (gigabits per second), but given AI demand Coherent now ships 800gbps transceivers.4
Imagine: you’re in a library helping someone research a topic and you’re able to carry about 5-10 books from the shelves to a table where they are seated. A 800gbps transceiver can move the equivalent of over one million books worth of data each second.5
The intelligence layer of the AI tech stack encompasses AI models and the unique data sets being used to train them.
Thomson Reuters (2.54% exposure in BAI)6 is a global provider of news, information and software solutions to professionals in finance, legal, tax and media. However, given their vast library of legal and business data, they are finding new revenues streams from licensing this data to developers who use it to train AI models. They are also applying their proprietary data to their own services, building out the largest online legal research delivery platform, Westlaw. Data & models are crucial here, as Westlaw aggregates and indexes data across millions of legal documents, relying on machine learning and AI models to analyze and categorize it all.7
Imagine: you’re a lawyer who needs to find relevant cases for a trial. Instead of spending hours searching through books and online databases, you can use AI- tools powered by data & models. These tools quickly scan through vast amounts of legal documents and can provide the most relevant information in seconds.
The final layer of the AI tech stack is applications & services. Think of this as the real-life applications of AI that have seamlessly integrated into the services and solutions you turn to daily.
ServiceNow (2.90% exposure in BAI)8 is a cloud-based platform that provides solutions for automating and managing common business procedures. Have you submitted a request to use your vacation days to your company’s HR team? This may have very-well been done through ServiceNow. Increasingly, ServiceNow is using AI to make work easier and more efficient for businesses, including creating tools that help automate repetitive tasks, solve problems, and improve workflows.9
Imagine: you run a company that manages a large fleet of delivery trucks. AI can monitor data from the trucks, such as engine performance and mileage. If the AI detects that a truck is likely to need maintenance soon, it can automatically schedule a service appointment. This helps prevent breakdowns and keeps the fleet running smoothly.
As AI continues to evolve and change the way we view technology, so must the way in which we invest in it. Investing across the different layers of the AI tech stack could be key to capturing the full investment opportunity in the AI theme. While the largest names in the space tend to make headlines, we believe there are under-the-radar players in AI that represent some of the most compelling opportunities. An actively managed ETF like the iShares A.I. Innovation and Tech Active ETF (BAI), provides hand-picked exposure to companies enabling, developing, and deploying today's most advanced AI technologies.
Holdings as of 04/07/2025 and subject to change. There is no guarantee that the companies discussed remain in the fund. For a complete list of most recent holdings, click on the fund card below. This is not meant as a guarantee of any future result or experience. This information should not be relied upon as research, investment advice or a recommendation regarding the Funds or any security in particular. Specific companies or issuers are mentioned for educational purposes only and should not be deemed as a recommendation to buy or sell any securities.
Our Funds
ASSET CLASS
TRENDING
Investment Strategies
EXPLORE NOW
GO FURTHER
Market Insights
EXPLORE NOW
MARKET INSIGHTS
Education
EXPLORE NOW
INVESTING 101
ETF EDUCATION
INVESTMENT STRATEGIES & ASSET CLASSES
PREPARING FOR RETIREMENT
Resources
INSTITUTIONAL INVESTORS
About Us
GET TO KNOW iSHARES
iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.
© 2025 BlackRock, Inc. All rights reserved.
1 BlackRock Investment Institute as of November 2024.
2 BlackRock as of 4/7/2025.
3 Coherent. About Us. Accessed April 2025. Forward looking estimates may not come to pass.
4 Coherent. Datacom Innoation In The AI Era. June 2023. Forward looking estimates may not come to pass.
5 Adeptia. The Surprising Things You Don’t Know About Big Data.
6 BlackRock as of 4/7/2025.
7 Thomson Reuters. Products-westlaw. Accessed April 2025.
8 BlackRock as of 4/7/2025.
9 Service Now. ServiceNow Puts AI to work for people. Accessed April 2025. Forward looking estimates may not come to pass.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
The Fund is actively managed and does not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses.
Active funds are subject to management risk, which means the fund manager's techniques may not produce desired results, and the selected securities may not align with the fund's investment objective. Legislative, regulatory, or tax developments may also affect the fund manager's ability to achieve the investment objective.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market.
AI technology relies on large data sets, which can lead to inaccuracies. Companies in AI face competition, rapid obsolescence, and depend on demand from various industries. Regulatory scrutiny could limit AI development, with data collection facing closer examination and potential fines. Country-specific regulations could also impact AI and big data companies.
International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/ developing markets or in concentrations of single countries.
This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this material is at the sole discretion of the viewer.
This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").
© 2025 BlackRock, Inc or its affiliates. All Rights Reserved. BLACKROCK, iSHARES, iBONDS, LIFEPATH, ALADDIN and the iShares Core Graphic are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
iCRMH0425U/S-4342375