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Investor enthusiasm surrounding the potential of new advances in artificial intelligence (AI) is helping push the markets to new heights. In particular, the seven largest tech enterprises by market cap -- collectively known as the "Magnificent Seven" -- are each taking unique routes along AI road maps.

While much of the chatter in AI is concentrated on these megacap tech businesses, savvy investors understand that there are opportunities beyond this small cohort. The challenge: Which individual stocks offer the most lucrative growth opportunities? One possible way to meet that challenge is to find a way around it. Index investing is a good option for investors who would like exposure to AI in their portfolios, but might be overwhelmed by the myriad individual stocks.

The Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ) is an exchange-traded fund (ETF) that contains a variety of stocks that all leverage AI technology in one form or another. This strategy could offer some lucrative long-term gains for patient investors.

Let's dig into the Global X Artificial Intelligence & Technology ETF and assess why now could be an interesting time to scoop up some shares.

How does index investing work?

A common misconception in the investment community is that you need to pick individual stocks that consistently outperform the markets to generate wealth. While picking specific stocks can lead to substantial long-term gains, there are also passive ways to approach the capital markets.

Index funds are a great way for investors to get started. These typically offer exposure to many different stocks, each with a different weight in the overall portfolio. This form of investing helps you create a diversified portfolio without requiring the heavy due diligence needed for each holding.

Even renowned (and experienced) investors such as Warren Buffett buy index funds to help diversify their portfolio of individual stocks.

A unique approach to investing in AI

What makes the Global X Artificial Intelligence ETF unique is that the fund is made up of a healthy balance of growth stocks and more steady blue chip opportunities. Moreover, the ETF also contains positions in several businesses that primarily operate overseas, providing a broad range of domestic and international opportunities.

Some of the fund's largest holdings include semiconductor manufacturer Nvidia, social media company Meta Platforms, e-commerce and cloud computing specialist Amazon, and streaming platform Netflix.

Although this is just a small sample of the total portfolio, investors can see that the Global X Artificial Intelligence ETF provides exposure to many different sectors -- each of which can be disruptive through the power of AI.

What can you expect from the Global X Artificial Intelligence & Technology ETF?

While AI is currently the hottest ticket on Wall Street, it would behoove investors to know that the Global X Artificial Intelligence & Technology ETF has been around since 2018. The table below breaks down the average annual returns for the fund as of Jan. 31.

There are some important distinctions to make note of here. First, the fund's return over the last year was largely fueled by the overall gains among tech stocks -- particularly in the Nasdaq Composite.

Similarly, the three-year return of 5% might appear muted. But 2022 was a poor year for the capital markets, and tech stocks in particular experienced heavy selling. Both of these time periods are examples of abnormal returns.

The five-year return and the ETF's overall return since inception paint a clearer picture of what investors could expect in the long run. While an annual return of 14% might not seem like much when compared to select individual stock performances, keep in mind that this is just a bit less than double the long-run return provided by the S&P 500.

Looked at another way, the Global X Artificial Intelligence ETF could very well present investors with a low-cost way to potentially outperform the market on a consistent basis over a long time horizon. Through the power of compounding, even a small investment of just a couple of hundred dollars each month could generate meaningful wealth over the long term.

Given the important generative AI will play in markets such as cybersecurity, cloud computing, enterprise software, and more, the Global X Artificial Intelligence & Technology ETF could be a terrific opportunity to gain exposure to several high-growth areas while also providing a good level of risk mitigation through diversification.

Should you invest $1,000 in Global X Funds - Global X Artificial Intelligence & Technology ETF right now?

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Netflix, and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.