The Impact of AI Industry Growth on U.S. AI Sector Stocks: A Machine Learning Analysis

Abstract

The rapid development of artificial intelligence (AI) since 2020 has significantly impacted the U.S. stock market, necessitating a deeper understanding of its influence on AI-related stocks. This study aims to analyze and predict the returns of the Global X Robotics & Artificial Intelligence ETF (BOTZ) as a proxy for AI industry performance. Employing Random Forest and XGBoost machine learning models, we trained on over a thousand data points to forecast BOTZ ETF returns. Our research reveals that AI-focused stocks and ETFs have outperformed the broader market since 2020, driven by increased AI adoption across industries, substantial research and development investments, and shifting investor sentiment towards tech-centric portfolios. The machine learning models demonstrated promising results in capturing complex market dynamics and providing reliable predictions. This study underscores the potential of integrating machine learning with financial analysis, offering valuable insights for investors and stakeholders in navigating the evolving landscape of AI-influenced markets.