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ARKK’s five-year return is negative 33%, while WTAI holds profitable AI leaders and charges 0.45%, delivering 43% year-to-date.
Micron gained 229% year-to-date and Palo Alto Networks increased revenue 31% as spending on AI infrastructure and security increased.
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The ARK Innovation ETF (NYSEARCA:ARKK) remains one of the market’s best-known thematic funds, marketed as a bet on disruptive innovation in AI, genomics, fintech and autonomous technology. Investors see ARKK as focused exposure to unprofitable, high-growth names that a market cap index would underweight, and Cathie Wood’s active management is a big part of the appeal. The fund manages $8.24 billion across 50 holdings and trades at a P/E ratio of 54. For readers who want an AI presence but no moonshot risk, this is iShares Future AI & Tech ETF (NASDAQ:WTAI) offers a different approach to the same theme at a lower cost.
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What the fund actually owns today
The submission dated April 30, 2026 clearly shows the concentration problem. The top 10 holdings include a 2.70% weighting in OpenAI Group PBC Series C, 4.98% in CRISPR Therapeutics, 5.18% in Advanced Micro Devices and 2.32% in Bullish.
According to the fund’s latest overview, Tesla accounts for 9.87%, Tempus AI accounts for 5.76% and Robinhood accounts for 5.03%, with the top 10 holdings accounting for 49.85% of assets. About half of the fund consists of 10 high-beta story-driven positions, and the AI weighting is diluted by biotech, crypto exchanges and consumer platforms.
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Where the incumbent falls short
There are two problems with returns. First, costs: The expense ratio is about 0.75%, about 30 basis points higher than WTAI’s reported ratio of 0.45%. For a $50,000 position, this gap is $150 per year, increasing to the detriment of the holder. Second, structure and returns: The fund is up 5.56% year-to-date and 15.28% over a year, with a five-year return of negative 33.23% from a starting price of $121.61 on July 20, 2021. Over the same five years, the Nasdaq 100 index returned 97.74%. Concentrated pre-earnings propensity has lagged the broader index in this window.
What makes the alternative different
The alternative is a passive, index-tracking fund whose portfolio is anchored on established AI beneficiaries with returns on the board. The stocks that do the heavy lifting in this basket clearly illustrate the difference. Micron reported third-quarter FY26 revenue of $41.46 billion, up 345.7% year-over-year, and non-GAAP EPS of $25.11, driven by HBM4 shipments to leading AI customers.
The stock is up 228.99% year-to-date. Alphabet reported revenue of $109.90 billion in the first quarter of FY26, with Google Cloud growing 63% year-over-year to $20.03 billion and having a backlog of over $460 billion. The stock is up 108.2% over the past year. Amazon reported AWS revenue of $37.59 billion, growing 28% year-over-year, its strongest growth in 15 quarters, with capital spending expected to be close to $200 billion in 2026.
Palo Alto Networks increased Q3FY26 revenue 31.1% to $3.00 billion while NGS ARR increased 60% to $8.10 billion. CEO Nikesh Arora cited “accelerating organic booking growth as customers turn to us to secure their AI deployments at scale.” Shares are up 82.98% year-to-date. The overall result: The alternative is up 43.38% year-to-date and 73.72% over a year.
This is well above the incumbent’s YTD return and well above QQQ’s YTD return of 15.48%. Investors curious about which names within the AI complex are actually making money today may find some overlap with the recommendations in “7 Stocks Driving the AI Boom.”
The real compromises and practical considerations
The alternative involves real compromises. Because of its index-based structure, there is no exposure to private market positions like the incumbent’s 2.70% OpenAI stake, which represents the kind of pre-IPO access that retail investors rarely get elsewhere. There is also an emphasis on mega-cap technology, which is more closely correlated with the Nasdaq-100 and therefore offers less diversification versus a broad Nasdaq decline.
And with a one-week return of -11.99%, sentiment in the AI sector can fluctuate wildly. With a tax-advantaged account, the switch occurs mechanically. In a taxable account, a position purchased near the July 2021 level of $121.61 would realize a loss at today’s price of $81.19, which could offset gains elsewhere. Positions purchased closer to current levels have fewer tax issues.
A partial swap, where the incumbent retains its private market exposure while adding the alternative as an AI core, preserves optionality on both sides. The incumbent still serves a specific investor: someone who wants active choice, access to private companies, and thematic breadth beyond AI.
For an owner whose primary goal is AI presence through profitable, large companies, the alternative achieves this goal at a lower price because the holdings are currently generating the returns that the incumbent expected in its thesis. The correct action depends on why the position was opened in the first place.
Act now: The analyst who called NVIDIA in 2010 just named his top ten AI stocks — and Amazon didn’t make the cut. Get the names for FREE today.
contact editor@247wallst.com for questions or corrections.
https://finance.yahoo.com/technology/ai/articles/skip-arkk-moonshots-fund-owns-165531298.html
