Amazon Just Landed a $38 Billion OpenAI Deal: Your Signal to Watch 3 ETFs

ChatGPT-owner OpenAI has been literally on a deal-signing spree recently, and its latest step in this initiative has been a colossal $38 billion-worth agreement with e-commerce giant Amazon.com (AMZN), announced yesterday. Per the terms of the deal, OpenAI will utilize Amazon Web Services (“AWS”) cloud infrastructure for the next seven years to run its core artificial intelligence (AI) workload. As one can imagine, following this deal’s market announcement, Amazon’s stock price rose a solid 4% at the bourses on Nov. 3, reflecting investors' optimism regarding the enormous growth potential of the AI industry. With this deal coming as a powerful endorsement of AWS' infrastructure, investors might want to tap into Amazon's AI-driven growth by investing in this stock. However, with experts like the Chair of the Bank of England and JPMorgan Chase CEO Jamie Dimon warning that a "sudden correction" or "bubble territory" in AI-driven asset valuations is possible, considering exchange-traded funds (ETFs) with major exposure to AMZN would be a smart choice for now. This is because ETFs offer built-in diversification to mitigate the risk associated with a single company's volatility. So, if the anticipated “AI bubble” bursts, the broad exposure of an ETF would cushion the blow far better than an individual stock holding.OpenAI's Spending Spree: Is it All Rosy or Comes With Thorns?As market participants, we all know that OpenAI’s partnership with Amazon is not an isolated event but part of this AI startup’s broader, aggressive expansion and follows other high-value, multi-year commitments with tech giants like Microsoft (reportedly $250 billion), Oracle ($300 billion), and Alphabet's Google Cloud Platform, along with chip supply deals with Nvidia and Broadcom. While this massive spending is galvanizing the entire AI industry, some experts remain concerned about its real growth potential and fear that part of its valuation may be inflated. OpenAI’s plan to invest more than $1.4 trillion in infrastructure far exceeds its estimated annual revenue of roughly $13 billion, prompting concerns that the figures may be inflated or that the agreements are “circular,” driven largely by expectations of future returns.Shortage of skilled labor in the United States, amid the uncertainty that has come with new tariffs and changes to immigration policy, will also remain a major bottleneck for the AI industry’s growth. Furthermore, infrastructure experts remain skeptical about the capacity of the U.S. power grid and related systems to support this exponential AI growth. To this end, Bain & Company’s latest 2030 global data center forecast report shows that despite solid growth among hyperscalers, the AI industry will grapple with power availability and construction delay challenges. However, alongside this, Bain expects North America to account for the largest concentration (about half) of data center capacity by 2030, fueled by hyperscalers’ capital expenditures. The booming AI industry’s long-term prospects appear solid, given its steady expansion into nearly every field, from healthcare to banking.The Case for ETFsDespite skepticism and market concerns, AI represents the next revolutionary technological advancement and is unlikely to be just a passing phase, even if the stock market undergoes its natural correction cycle.For long-term investors, holding a diversified ETF through a market downturn can help them remain well-positioned to capture significant gains once the market recovers and the fundamental benefits of partnerships such as the one with OpenAI begin to materialize.Thus, we present three ETFs with the highest exposure to Amazon that investors can add to their watchlists to weather cyclical market corrections and benefit in the long run.ProShares Online Retail ETF (ONLN) This fund, with an average market capitalization worth $179.18 billion, provides exposure to 19 companies that are at the forefront of the rising e-commerce theme. Of these, Amazon holds 27.20% of the fund. ONLN has surged 35.8% year to date and charges 58 basis points (bps) in fees. Vanguard Consumer Discretionary ETF (VCR)This fund, with net assets worth $6.5 billion, offers exposure to 292 U.S. companies that come from the consumer discretionary sector. Of these, Amazon holds 21.54% of the fund. VCR has risen 7% year to date and charges 9 bps in fees. Consumer Discretionary Select Sector SPDR Fund (XLY)This fund, with assets under management (AUM) worth $25.05 billion, offers exposure to 49 U.S. companies that come from specialty retail; broadline retail; hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles; automobile components; distributors; leisure products; and diversified consumer services industries. Of these, Amazon holds 24.37% of the fund. XLY has risen 8.6% year to date and charges 8 bps in fees.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports ProShares Online Retail ETF (ONLN): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks