AI Correction Fueling the Case for Buffer ETFs: Here's Why

Tech investors are grappling with a reality check in the artificial intelligence sector. The concerning gap between massive capital expenditures and their revenue realization, combined with persistent overvaluation worries, has been pressuring the Nasdaq-100 and S&P 500 alike. Last week exemplified this tension: Oracle’s shares cratered 14% on revenue shortfalls, dragging down AI-related plays like NVIDIA and Micron, while Broadcom slid 11% despite solid earnings—a stark reminder that capital spending concerns and delayed AI payoff timelines are bothering even the strongest performers.

The Shift Toward Risk Management

Rather than sitting through these oscillations, a growing number of investors are exploring investment structures that blend growth exposure with downside cushioning. Enter Defined Outcome ETFs—buffer-style instruments that use options strategies to cap maximum returns while typically protecting against the first 10-20% of losses over a designated annual period. Nick Ryder, Chief Investment Officer at Kathmere Capital Management, notes these tools work particularly well alongside trend-following and covered-call strategies to dampen portfolio volatility.

Goldman Doubles Down on Structured Outcomes

The institutional shift toward buffer strategies just got a major endorsement. Goldman Sachs Asset Management is acquiring Innovator Capital Management, a pioneer in the Defined Outcome ETF space, for $2 billion—a signal that Wall Street sees real value in this product category heading into 2026. The deal closes in H1 2025.

Three Buffer ETFs Worth Monitoring

BUFR - FT Vest Laddered Buffer ETF: This large-cap equity play uses a laddered 12-fund structure to limit downside risk while maintaining S&P 500 exposure. It’s posted 9.7% gains over six months versus SPY’s 13.6%, charging 95 bps annually.

BUFQ - FT Vest Laddered Nasdaq Buffer ETF: Targeting tech-heavy exposure with downside limits via four laddered Nasdaq-100 Buffer ETFs, BUFQ delivered 9.8% returns over the same period, at 100 bps in fees.

DECW - AllianzIM U.S. Large Cap Buffer20 Dec ETF: Currently in its Dec 2024-Nov 2025 outcome period, this fund caps upside gains while buffering the first 20% of S&P 500 losses. It’s accumulated 11.3% over six months and costs 74 bps.

The appeal is straightforward: capture meaningful upside while knowing your downside is structurally limited. For investors tired of the AI volatility rollercoaster, these instruments offer a middle ground between opportunity and peace of mind.