Exploring Investment Opportunities in Artificial Intelligence

Are you curious about artificial intelligence as an investment opportunity? The rise of generative AI, exemplified by tools like ChatGPT, is making waves across various sectors. AI start-ups are proliferating, and many established enterprises are enhancing their capabilities in this revolutionary field.

The rapid growth of AI, paired with high performance expectations, has created a volatile market for AI-related stocks. The enthusiasm generated since the launch of ChatGPT in late 2022 has led to a significant upward trajectory in AI stocks, causing many future growth prospects to be reflected in current prices. For those willing to take on the associated risks, the next logical question is: how can your investment portfolio gain exposure to AI?

1. Buy Stock in Legacy Companies with AI Exposure

One accessible method is to invest in large tech companies that are heavily engaged with AI technology. While your exposure might be somewhat diluted due to the diversified nature of these companies, this avenue can be appealing for risk-averse investors seeking stability.

Legacy companies often have established market positions and diversified revenue streams, offering stability while capitalizing on AI developments. Major tech companies leading the charge in AI include:

• Google: Under its parent company Alphabet, Google has been a pioneer in AI since its inception. With its generative AI chatbot, Gemini (formerly Bard), and ongoing research through DeepMind, Google seamlessly integrates AI into its extensive range of products.
• Microsoft: The software giant has forged a significant partnership with OpenAI, the creator behind ChatGPT. This partnership extends AI integration across Microsoft’s products, such as Bing and Microsoft 365, enhancing desktop productivity.
• NVIDIA: Known for producing cutting-edge graphics processing units, NVIDIA plays an essential role in powering AI applications. Their hardware and software facilitate machine learning and AI workloads, showcasing their commitment to AI development.

2. Buy Stock in AI Companies

For a more direct approach, consider purchasing shares in publicly traded companies that solely focus on AI technologies. While this route may yield higher potential profits, it comes with increased risk, necessitating vigilant research on industry trends and technological advancements.

Two noteworthy publicly held AI-centric companies include:

• C3.ai (AI): This company specializes in enterprise AI applications and offers a comprehensive application development platform.
• UiPath (PATH): A leader in automation, UiPath combines AI with automation technologies to enhance workflows across various sectors.

While there are several promising AI companies, many, including C3.ai and UiPath, have yet to turn a profit, emphasizing the speculative nature of investing in this sector.

3. Invest in Companies Using AI to Innovate

If you’re looking to diversify away from a pure tech portfolio, consider companies across various industries harnessing AI for innovation. Several industries are leveraging AI technologies to transform operations:

• Big Pharma: Pfizer is employing AI to fast-track drug discovery processes, significantly accelerating the time taken to bring new treatments to market.
• Heavy Equipment: John Deere has introduced AI-driven autonomous tractors capable of optimizing agricultural tasks in real time.
• Apparel: Nike is integrating AI and automation as part of its digital transformation strategy to enhance its retail and product innovation processes.

4. Buy Shares in Publicly Traded AI Funds

If investing in individual stocks seems daunting, consider investing in funds focused on AI. Exchange-traded funds (ETFs) provide a diversified approach to gaining exposure in this dynamic sector. Some popular AI-focused ETFs include:

• Global X Robotics & Artificial Intelligence ETF (BOTZ)
• Global X Artificial Intelligence & Technology ETF (AIQ)
• ROBO Global Robotics & Automation Index ETF (ROBO)
• iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)

While ETFs offer a convenient investment option, it’s crucial to research the specific holdings as the degree of AI focus may vary.

The Bottom Line

You don’t need to limit your investment strategy to just one approach. A varied portfolio may mitigate risk while still providing exposure to AI, a sector likely to experience fluctuations. Conducting thorough research before making investment decisions is vital to ensure alignment with your financial goals and risk tolerance.

This article serves educational purposes and does not constitute investment advice. Always consult a financial expert before making changes to your investment strategy.