How to Invest in Artificial Intelligence
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We cannot ignore that artificial intelligence (AI) and machine learning are changing how we live and do everything in the industry, from the possibility of self-driving cars to using social media algorithms that show customized content. All of us are aware of the AI advances in image generation or chatbots and text. You may also have heard of how AI is used in healthcare today. This is only the beginning, and the future will be AI-powered.
Many people see AI as a cash-generating machine, but there is a period between innovation and the adoption of any new technology. This is when the risk will either lead to rewards or nothing will pan out. The risks are present, but so are the opportunities. To some extent, the technology is in the nascent stage, but this also means you have big opportunities lying ahead.
It is predicted that machines will replicate human intelligence without any requirement or need for human input, and with this space growing tremendously, every industry will be impacted by it. Many tech companies have invested heavily in generative AI, and if you want to invest in it, we will tell you how to go about it.
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How far-reaching is artificial intelligence?
Artificial intelligence covers everything from search engine algorithms to self-driving cars and robotics. It has immense potential and can transform every industry in the country. As per Zion Market Research, the AI industry will grow globally to $422.37 billion by 2028. The easiest and most convenient way of investing in artificial intelligence is through the stock of companies that sell AI services to clients.
The industry has not been truly monetized yet, but some tech giants are integrating AI into their software and making money. Similarly, there are autocorrect, maps, and personalized buying suggestions used by e-commerce companies to please customers.
However, the recent AI development in ChatGPT has taken the world by storm. But the tools are experimental, and there are innovations, but nothing has been proven to be a sure-shot success yet. However, one thing is certain, AI will be a new tool, and it will change the way we engage with each other and have access to information. Monetization could be a challenge, but it is certain that if tools like ChatGPT are the right way forward, then companies will be ready to bet their money on it.
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Individual AI stocks
Microsoft, Alphabet, Nvidia, and Tesla are some of the companies vying for the top spot in AI applications, and they want to turn their AI research into a lot more than we can imagine.
Google and Microsoft strive to turn the search engines into an end-to-end inquiry source, the one place for advice and analysis. Now, instead of looking for information through different keywords, you need to ask the search engine a couple of questions, and you will have the answers depending on what is out there on the internet.
The idea is to invest in those companies that use AI in their services and products. When you invest in companies that use AI, you can collect profits from the development of the technology. Consider these AI stocks to invest in.
Alphabet Inc.
Alphabet is the parent company of Google and is already a leader in AI research. We’ve already seen the power of AI in our daily searches and how it can organize photos for us. Google is already a leader in AI use, and some of its examples include Google Assistant and Google Maps, which use AI-powered updates to give you a real-time view of where you are headed. Besides this, Alphabet also owns a company that uses AI for drug discovery and is known as DeepMind. Investing in Alphabet stock could help you invest in the potential of AI and take home gains as the company grows.
Nvidia Corporation
Nvidia is a chip maker that could also be the biggest beneficiary regarding AI. It is responsible for powering many AI applications and offers AI solutions to industries ranging from education, electric vehicles to healthcare. It has invested in AI for years, and its data center business is raking in big money quarter after quarter. The company makes semiconductors and makes the most of AI’s computing power. It recently displayed what text-to-video generative AIs look like, and this could have sounded like a dream a few years back. This company is tying its future with AI at the right time.
Microsoft Corporation
The cloud computing giant Microsoft is already making solid moves in the AI industry. Its total investment in OpenAI is $13 billion, which is only the beginning. The company’s AI solutions are powered by Azure, which provides daily intelligent experiences in Xbox, Windows, Teams, Microsoft 365, Power Platform, Azure Ai, and Microsoft Defender. Microsoft also owns the search engine Bing, which gives solid competition to Google search. Besides the massive AI potential, Microsoft is a leader in the industry and has consistently generated returns for investors.
Amazon
AI technology has been deeply integrated throughout Amazon, and has already been using AI to customize products for customers to see. That said, Amazon also uses AI at various fulfillment centers, where it has small robots that are used to ferry packages in and around the warehouses for human workers. It has Amazon Go stores and Amazon Fresh, which is also AI-dominated. Thus, AI plays a huge role in the business and will continue to do so. Amazon is investing heavily in AI and trying to make deliveries efficient and quicker. Investing in Amazon stock means owning a part of a company that is taking huge strides in the AI industry.
Tesla
It is impossible to miss out on a company with a specific annual AI day. Known for self-driving cars, humanoid robots, and maybe a robot taxi service, Tesla is a leader in the AI industry. It is always working on innovations with regard to AI, and at this stage, we can only imagine what its technological advancement could look like in the next five years. Tesla’s projects are ambitious, but they also have the potential to transform the entire industry. The company is investing heavily in the field and is worth looking at as an investment if you want to invest in the stock market.
Meta Platforms Inc.
You might have already seen the use of AI with Meta, and you must also be aware of how it uses AI in algorithms for Facebook ads as well as news feeds. With AI technology, this is just scratching the surface of what Meta is capable of. The company already owns Meta AI lab, which is trying to use AI to decode speech from the brain activity of those who have suffered traumatic brain injuries. It is still in the early stages, but it could show that Meta can transform the future of AI.
C3.ai
C3.ai is engaged in enterprise AI and offers customized AI applications to clients keen on going all digital and getting their companies on cloud computing. It is a pure-play AI company. They use AI algorithms to reduce costs, manage operations, detect fraud, and ensure employee safety. It hasn't reported any profit because it is still making expansion investments.
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Use robo-traders
Robo-traders have become an important part of the market, and for good reason. If you are a beginner and do not have the knowledge or skills to choose stocks by yourself, you can consider using a robo-trader. It offers an algorithmically managed portfolio based on your goals and preferences. You invest your money per your conditions but the brokerage will handle the portfolio for you. There are several robo-traders in the market you can choose from. Artificial intelligence also has the potential to improve this further. You might also want to consider an AI-built portfolio as an investment strategy. It is a fairly new trend that could become huge in the coming years.
AI funds
One way to invest in AI is through AI funds. The market is already flooded with companies wanting to capitalize on this technology. As an investor, you can reduce the risk by putting your money into AI funds.
There are EFTs like the Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ), or ROBO Global Robotics and Automation Index ETF (BOTZ) that allow you to invest in the market.
The ETF will invest in stocks and assets engaged in AI, like companies that make hardware or chips that other AI companies currently depend on. The right way to start is to look at how the fund invests to determine if you are interested in that.
Venture capital funds
If you want to be a direct investor and part of a startup or an early-stage company, you can consider investing in venture capital funds. These funds invest in AI startups and can provide exposure to a large portfolio of companies with high growth potential. However, the investment comes with high risks.
FAQs
Is AI a good investment?
The future is AI; if you want to put your money where it grows, consider AI investments. You do not have to worry about setting aside thousands of dollars, you can purchase fractional shares of companies that have invested in AI.
Where will AI be in 2025?
According to UBS, the artificial intelligence hardware and service market will reach $90 billion by 2025. It was worth around $36 billion in 2020.
Should I invest in AI?
It can be tempting to join the bandwagon and invest in AI because you see everyone around you do so. But only you can decide if you should proceed with it or not. You must understand the broader AI ecosystem and its potential to impact other industries. Identify your risk-reward criteria and understand your long-term and short-term investment goals before you proceed.
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The bottom line
When it comes to the potential of AI, we have just scratched the surface here. Many companies specialize in AI, while many are ready to implement AI-based technology for their growth and expansion.
AI will be the next big boom, and it can disrupt every industry you can imagine. But deciding the right areas that can make strong investments can be difficult. There are plenty of opportunities you can consider and profit from. Choosing the right one for you will depend on the risk and your expectation of reward
Investing in AI could mean significant profits in the long term. However, you must keep the market volatility in mind and remember that you will not double your money overnight. As and when there are advances in the AI market, you can make money, but it will need time and patience. The market is volatile, so when investing in stocks, remember diversification is the key.
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Editor
Vandita Jadeja is a financial writer and editor at Joywallet. She loves to read and write about money and brings a decade of experience from the financial industry.
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