Artificial intelligence investing has largely been dominated by mega-cap technology companies such as Nvidia, Microsoft, and other leading chip designers. However, investors seeking broader exposure to the next phase of AI expansion are increasingly looking beyond the industry’s largest names. The Invesco S&P MidCap Momentum ETF (XMMO) has emerged as one potential alternative, offering exposure to mid-sized companies supplying the equipment, infrastructure, and industrial technologies supporting the continued buildout of artificial intelligence. Rather than concentrating investments in a handful of technology giants, the fund provides diversified access to businesses positioned throughout the AI supply chain.

Mid-Cap Companies Benefit from Expanding AI Infrastructure

XMMO tracks a portfolio of approximately 80 mid-cap companies selected based on price momentum within the S&P MidCap 400 Index. This rules-based methodology allows the fund to continuously adjust its holdings as market leadership evolves, increasing exposure to companies demonstrating improving business performance and investor demand.

Many of the ETF’s holdings operate in industries closely tied to AI infrastructure, including semiconductor manufacturing equipment, optical networking, electronic components, engineering services, and advanced industrial technologies. These businesses supply many of the critical products required for data center expansion, chip production, and high-performance computing infrastructure supporting artificial intelligence applications.

Several holdings have delivered particularly strong share price performance as enterprise AI investment continues accelerating.

Industrial Exposure Expands Growth Opportunities

One of XMMO’s distinguishing characteristics is its diversified sector allocation. Although technology companies remain an important component of the portfolio, industrial businesses account for a substantially larger share of total holdings.

This broader exposure allows investors to participate in infrastructure investment extending beyond semiconductor design alone. Companies involved in electrical systems, construction, advanced manufacturing, and specialized industrial equipment increasingly benefit from rising capital expenditures associated with AI data centers, cloud computing facilities, semiconductor fabrication plants, and digital infrastructure.

As technology companies continue investing billions of dollars in artificial intelligence, spending increasingly flows throughout the broader industrial ecosystem, creating opportunities for suppliers supporting the physical infrastructure required to deploy AI at scale.

Momentum Strategy Adapts to Changing Market Leadership

Unlike traditional market-cap-weighted ETFs, XMMO employs a momentum-based methodology that periodically adjusts holdings based on relative market performance. Companies demonstrating stronger price momentum receive greater representation, while weaker-performing businesses are removed as market leadership changes.

This dynamic approach may prove particularly valuable during the rapidly evolving AI investment cycle, where leadership frequently shifts among semiconductor manufacturers, networking providers, industrial suppliers, and infrastructure companies. Rather than requiring investors to identify individual winners, the ETF systematically adapts its portfolio as new growth leaders emerge.

While the fund carries a higher expense ratio than many passive index ETFs, supporters argue that its active momentum methodology provides broader exposure to companies positioned to benefit from continued AI capital investment while reducing concentration risk associated with mega-cap technology stocks.

Looking ahead, artificial intelligence investment is expected to expand well beyond chip designers into the companies building the physical infrastructure that supports AI deployment. Mid-cap industrial and technology suppliers may increasingly benefit as data center construction, semiconductor manufacturing, networking capacity, and electrical infrastructure continue growing worldwide. For investors seeking diversified exposure to this broader ecosystem, momentum-based strategies such as XMMO offer an alternative way to participate in the long-term expansion of artificial intelligence infrastructure beyond the industry’s largest technology companies.