3 Tech Funds Poised to Capitalize on AI-Driven Market Growth

The artificial intelligence (AI) revolution is reshaping the global economy, with the S&P 500's technology sector surging 40% over the past year as companies like NVIDIA and Microsoft dominate AI infrastructure and applications. Amid this boom, investors face a dilemma: how to access concentrated AI exposure without the volatility of individual tech stocks. Enter three mutual funds—DWS Science and Technology A (KTCAX), Janus Henderson Global Technology and Innovation Fund (JNGTX), and T. Rowe Price Science & Tech (PRSCX)—which offer diversified portfolios of AI leaders, low expense ratios, and top Zacks rankings to capitalize on the $243.7 billion global AI market.

Why Mutual Funds for AI Exposure?

AI's rapid growth is fueling a gold rush, with giants like Microsoft investing $80 billion in AI infrastructure and the U.S. tech sector's “Magnificent 7” companies allocating $267 billion to AI in 2025 (per UBS). Yet buying individual stocks like NVIDIA (NVDA) or Advanced Micro Devices (AMD) carries outsized risks. Mutual funds mitigate this by spreading investments across AI leaders, reducing exposure to company-specific missteps. Additionally, their professional management and economies of scale lower transaction costs—critical as the Stargate Initiative (a $500 million U.S. project to develop AI chips) and similar efforts drive demand for semiconductor and data infrastructure stocks.

Fund Spotlight: KTCAX, JNGTX, and PRSCX

1. DWS Science and Technology A (KTCAX)

• AI Exposure: Holds 80% in U.S. tech firms, including NVIDIA (10.2%), Microsoft (8.5%), and Alphabet (7.1%)—companies at the heart of AI development.
• Performance:
• 3-year return: 11.9%
• 5-year return: 20.3% (Zacks #1-ranked fund)
• Cost Efficiency: Expense ratio of 0.87%, below the 1.03% category average.
• Why Buy? Its focus on AI-driven semiconductors and cloud infrastructure aligns with the Stargate Initiative's goal of advancing U.S. chip dominance.

2. Janus Henderson Global Technology and Innovation Fund (JNGTX)

• AI Exposure: Invests in global tech leaders like NVIDIA (11.5%), Taiwan Semiconductor Manufacturing (TSM) (9.1%), and ASML Holding (3.3%)—key suppliers of AI chip manufacturing tools.
• Performance:
• 3-year return: 23.8% (Zacks #1-ranked fund)
• 5-year return: 16.7%
• Cost Efficiency: Expense ratio of 0.78%, undercutting the 1% category average.
• Why Buy? Its global reach captures AI advancements beyond U.S. borders, such as TSM's dominance in chip fabrication and ASML's EUV lithography technology.

3. T. Rowe Price Science & Tech (PRSCX)

• AI Exposure: Anchored by Microsoft (10.9%), NVIDIA (9.8%), and AMD (5.2%)—firms leading AI software and hardware integration.
• Performance:
• 3-year return: 11.8%
• 5-year return: 16.5% (Zacks #2-ranked fund)
• Cost Efficiency: Expense ratio of 0.79%, below the 1.05% category average.
• Why Buy? Its emphasis on cloud computing (Microsoft Azure) and AI partnerships (e.g., Microsoft's OpenAI collaboration) positions it to benefit from enterprise AI adoption.

Key Advantages of These Funds

1. Diversification: Each fund holds over 100 stocks, spreading risk across AI software, hardware, and infrastructure.
2. Risk Mitigation: Their global exposure (e.g., JNGTX's 35% foreign holdings) and focus on established tech leaders reduce volatility compared to speculative AI startups.
3. Cost Efficiency: All three funds undercut category expense ratios, saving investors $2,000 annually on a $100,000 portfolio versus average-cost peers.

The AI Market's Growth Trajectory

The global AI market is projected to hit $243.7 billion by 2027 (Grand View Research), driven by healthcare, finance, and autonomous systems. The Stargate Initiative's $500 million investment in AI chips alone signals long-term government and corporate backing. For individual investors, these three funds offer a low-risk, low-cost way to participate in this boom:

• KTCAX excels in U.S. semiconductor and cloud leaders.
• JNGTX captures global chip manufacturing and AI tooling.
• PRSCX focuses on enterprise AI software and infrastructure.

Final Take

The AI revolution is no longer a distant future—it's here, and its growth will outpace individual stock volatility. By investing in KTCAX, JNGTX, and PRSCX, investors gain access to AI's core drivers while minimizing risk through diversification and cost-effective management. With Zacks' top rankings and returns outpacing the S&P 500, these funds are ideal for long-term growth strategies.

Action Step: Allocate 5–10% of a diversified portfolio to these funds, holding for at least three years to capture AI's compounding returns.

Data as of June 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.