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How To Invest In AI

Written By
Updated
December, 2023

Artificial intelligence (AI) has become one of the hottest tech trends in recent years, and for good reason. The potential applications of AI are vast, ranging from smart homes to self-driving cars to sophisticated medical diagnoses. With so much potential, it's no wonder that many investors are clamouring to get a piece of the action.


 


But investing in AI isn't as simple as just picking a few tech stocks and hoping for the best. There are many factors to consider when investing in this rapidly evolving field. In this article, we'll take a closer look at how you can invest in AI and what companies might be worth considering.

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The Current Boom Of Artificial Intelligence

To understand why investing in AI is such an attractive proposition right now, it’s important to first appreciate the current landscape. Over the past few years, there has been an explosion of investment into AI research and development across various industries.

The growth trajectory detected across the entire spectrum of AI applications has transformed investing strategies worldwide. From healthcare to finance, businesses are increasingly leveraging advanced algorithms and machine learning capabilities that unlock unprecedented levels of insight, efficiency, and automation. 

As such, both established tech giants—like Alphabet Inc., Amazon.com Inc., Apple Inc., Facebook’s parent company Meta Platforms Inc., and Microsoft Corp.—and up-and-coming smaller firms have joined the race vying for dominance within this burgeoning domain. However, determining which among these enterprises merits further attention requires an understanding of rudimentary sector dynamics from not merely a technological standpoint but also a financial one.

Investment Opportunities

So where exactly should investors look if they want exposure to the growing world of artificial intelligence? As with any investment sector imbued with promise yet shrouded in uncertainty due to its nascent nature, zeroing in on leading companies is crucial when navigating the world of ‘AI investing’. A variety of factors might determine robust contenders; sales growth rates combined with healthy profit margins indicate sustainable performance; relevant intellectual property rights reflect potential industry disruption; customer base expansion showcases market reach; collaborations or acquisitions evidence industry positioning. 

In this section we will cover which AI companies you should consider, profitable ETFs, and instruments that can help you kickstart your AI investor’s journey. 

AI Companies to Invest In

  • NVIDIA Corporation: NVDA focuses largely on chips created specifically for data centres focused on operations like machine learning.
  • Autodesk: ADSK is a company focused on developing tools around Artificial Intelligence, Machine Learning and Natural Language Processing to make designing and prototyping more automated. 
  • Palo Alto Networks: PALO is well known for its security software designed to stop automated cyber attacks including ransomware through machine learning based algorithms. As of Q1 ’23 the company surpassed earnings expectations amid cybersecurity tampering concerns that have set corporates wary, resulting in projected uptick in demand for cyber protection from AI, boosting investor confidence.
  • Alphabet Inc.: Alphabet’s Google trading under GOOGL, ranks among giants in the AI industry with strengths ranging from its DeepMind AI subsidiary, continuing transformative work on AlphaGo –  a game-playing PC program which defeated the world champion human player- as well cashing their collective knowledge into profitable search technologies such as Google Duplex. Google Cloud’s ML services profitably combines customer acquired data with incredible visualisations employed across diverse fields like B2B applications, Predictive Analytics, Sensitivity Analysis, Behavioral Segmentation.

For those pursuing low-risk investment options that tap into the expansive realm of artificial intelligence without necessarily focusing on individual stocks, ETFs offer abundant possibilities. 

With a wealth of options boasting diversified holdings spanning reputable blue-chip corporations as well as disruptive startups, these instruments enable investors to reap rewards through broad market exposure featuring benchmarks, all while minimising risks derived from concentrating excessively on any solitary asset class.

Popular ETF Choices

  • Robo Global Healthcare Technology and Innovation ETF (NYSE: HTEC)
  • Global X Robotics and Artificial Intelligence ETF (BOTZ) 
  • ARK Autonomous Technology & Robotics ETF (ARKQ
  • Global Robotics and Automation ETF) (ROBO)
  • ETFS Battery Tech & Lithium ETF (RBTZ)

Investing in various industries can yield different levels of performance. The important thing is to understand the specific details of each investment opportunity, especially within the context of rapidly changing technology landscapes, in order to identify attractive and necessary opportunities for investment.

When exploring how best to ‘Invest in AI,’ instruments associated directly with firms vested in AI development can likewise offer remarkable prospects. Some options include:

  • Private equity investments: Financing rounds and unlisted equities present viable opportunities for investing in high-potential AI startups or industry leaders not yet available on public markets.
  • Venture debt funds: Another means of securing a stake in startups bypassing traditional equity investments centres around venture debt funds that provide the necessary capital to rapidly growing companies while remunerating investors with fixed interest rates.
  • Angel investing: For those undeterred by seemingly elevated risk levels, angel investors maintain direct relationships with budding entrepreneurs grappling with early-stage strategies thus enabling them to witness developments first-hand in tandem with potentially achieving sizable returns upon successful exits.

Conclusion

As artificial intelligence (AI) becomes increasingly important in our economy and society, it is a good time to consider ways to take advantage of its potential in investment opportunities. Investing in stocks, ETFs, and other instruments that involve companies working on innovative technological developments in robotics or machine learning can benefit investors in many ways, including diversifying their portfolios and supporting progress toward a transformed future. By making informed investment decisions, investors can help shape this future, one investment at a time.

Artificial Intelligence integrations will continue being an integral part of modern times moving forward, hence finding profitable ways to earn returns seems logical. The possibilities really do seem endless.