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How to Invest in Artificial Intelligence

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  • What is AI
  • Why is AI popular
  • How to invest in AI

Artificial intelligence (AI) is quickly reshaping our lives, creating keen interest among investors seeking long-term growth investment prospects. The interest in AI traces back to November 2022, when ChatGPT – a groundbreaking chatbot service by OpenAI debuted publicly.

Understanding AI

AI refers to the development of computer systems capable of performing tasks, which typically require human intelligence. These tasks include learning, reasoning, problem-solving, perception, understanding natural language, and interacting with the environment. AI systems are designed to replicate cognitive functions like learning from experience and adapting to new situations.

Importance of AI

Artificial intelligence has now profoundly impacted our world and become an integral part of our daily lives. The technology fuels our smartphones, home devices, enables autonomous vehicles, etc. AI research and development is rapidly changing operations in governments, societies, and industries. In 2035, AI technologies are actively sculpting the future and are envisioned to increase labour productivity by up to 40%.

AI has reshaped industries, ranging from healthcare to finance, revolutionizing the way we approach problems and make decisions. Today, AI continues to evolve rapidly, with deep learning algorithms, inspired by the human brain, expanding the boundaries of machine comprehension and capability.

We are at the brink of a future where AI holds the potential to transform every facet of our lives. AI has become an integral part of most companies and is used in various technologies such as automation, machine learning, NLP, robotics, self-driving cars, machine vision, etc.

How to invest in AI

Investing in AI has become increasingly popular in recent years, as the technology continues to revolutionise industries such as healthcare, finance, and transportation. One challenge of investing in AI is that there are few pure-play AI opportunities available on the market.

There are several different ways to invest in AI today. Investors can buy the shares of publicly traded companies that develop AI software and manufacture the hardware that runs AI applications. Alternatively, there is an emerging category of exchange-traded funds (ETFs) that invest in artificial intelligence companies.

Investing in leading AI companies

Buying individual AI stocks has been in “vogue” over the past year with many of them generating stellar returns for shareholders. Many of the world’s leading tech companies are investing heavily in AI and deploying it across existing services to improve them. It’s a prudent approach to look at the leading AI stocks on the market.

Many large tech companies are investing heavily and leverage AI in different ways, such as NVIDIA, Super Micro Computer Inc, Qualcomm, ARM Holdings, Amazon, Google, Microsoft, etc. These companies are at the forefront of AI technology and have rewarded investors immensely.

These are just a few of the companies that will be at the forefront of the AI race in the years ahead. All of these companies either provide the tech that powers AI or benefit the most from implementing it into their core businesses.

Investing in AI ETFs

An ETF is a basket of stocks that can be bought and sold on the stock exchange like individual stocks. ETFs are an excellent way to capitalise on the booming demand for AI investments avoiding the guesswork and risk involved with choosing individual stocks. AI ETFs are lower risk alternative to owning AI stocks.

There are presently nearly 20 U.S. ETFs focusing on companies producing computer chips for the AI industry or using AI in their business.

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Source: Worldwide Next Move Strategy Consulting

AI outlook

Following a stellar run, the valuations of some AI stocks might be getting stretched, although not reaching the extreme levels witnessed during the dot.com bubble. While a pull back in AI stocks could be seen in the short-term, the long-term up trend is far from over.

The continuous research and innovation by tech giants are driving the adoption of advanced technologies in various industries such as automotive, manufacturing, healthcare, finance, and retail.

The artificial intelligence market is expected to grow strongly in the coming decade. The global AI market value of around $200 billion in 2023 is expected to grow up to nearly $2 trillion by 2030.[1]

Footnotes:
  1. Next Move Strategy Consulting
Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

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He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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