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As social media inundates us with product recommendations, it’s hard to ignore the impact of AI (Artificial Intelligence) on our daily lives. AI is rapidly transforming the global technology domain, especially with the rise of Chat GPT, and its influence extends to every industry. Its potential to revolutionize industries from healthcare to social media is immense, and companies are increasingly using it to stay ahead of their competition. Investors are thus wondering how to invest in Artificial Intelligence.
AI can automate human tasks, increase productivity, and perform functions without human intervention. Its applications are diverse, ranging from automating routine tasks to fraud detection. Industries such as education, healthcare, and manufacturing rely on AI to grow and progress.
Investing in AI is the future, along with traditional investments like hedges like gold bonds or evergreen investments like pharma stocks. There are several ways to invest in AI, including mutual funds, ETFs, securities traded on brokerages, and dividend-paying stocks. Diversification is critical in investing, especially in volatile markets, and investors should consider their risk tolerance and allocation strategy. By investing in AI, investors can position themselves for profitable returns in a rapidly evolving industry.
How to Invest in Artificial Intelligence (AI)
How to Invest in Artificial Intelligence (AI) Before It’s Too Late
Investing in AI stocks
Most technology companies use AI aggressively in their day-to-day operations, and that gives us a hint- that if we want to invest in AI, then we can consider these companies for our investment portfolio:
- Nvidia Corporation: The premier chip manufacturer, Nvidia, is utilizing AI to its very core, with its graphic cards being used by multiple data centers around the world. Though a big name in the Graphics Processing Unit (GPU) market, Nvidia is also expanding its business in the AI vertical. It develops programs and platforms, both hardware and software, that can enable driver-assistance features which are the prime focus areas of self-driven cars. There is also a massive amount of AI potential in Nvidia’s professional visualization section, which includes its omniverse. The company offers companies a wide range of services, from speech recognition solutions to supply chain management solutions. This diversified business is an inviting factor to invest in the company through the stock market.
- Alphabet Inc.: Alphabet, the parent company of Google, is a leading conglomerate in AI research, utilizing AI not only through Google but various other platforms. Google Assistant, Google Maps, and Google Search, all AI-enabled, are integral to our lives globally, demonstrating AI’s tremendous power over us. DeepMind, an Alphabet-owned company, employs AI technology for technological research, including drug discovery and digital humanoid training. Given Google’s indispensable role in daily life, investing in the company’s stocks could be prudent.
- Amazon: Since its inception, technology has been integral to Amazon’s operations, with artificial intelligence (AI) playing a central role. AI is used across all of Amazon’s business areas, from the AI-powered voice assistant Alexa to Amazon Web Services, a cloud infrastructure tool. The e-commerce platform is built on an AI algorithm, and even Amazon Go, the cashier-less store, relies heavily on AI. AI is a crucial component of Amazon’s growth strategy, and given the company’s global presence, investing in its securities is an intelligent move.
- C3.ai: C3.ai is a standout AI stock whose name indicates its focus on artificial intelligence. As a SaaS company, C3.ai builds software to assist large businesses in deploying AI applications. The company is a trailblazer in its field and maintains that it has no direct competition in end-to-end enterprise AI development platforms. This distinct approach to AI makes C3.ai a potentially lucrative investment in the volatile market.
Investing in AI ETFs
In the investment world, there are endless discussions on strategies such as buy-and-hold stocks, index funds, commodities, dividend stocks, brokerages, small-cap and large-cap funds, hedge funds, and penny stocks. However, Exchange-traded funds (ETFs) have been consistently outperforming the rest. As a responsible financial planner, diversification of investment strategies is crucial to meet financial goals and managing risk tolerance. AI-focused ETFs offer the best of both worlds, maximizing returns while investing in the cutting-edge AI vertical. Investing in AI ETFs is a wise choice for those who want to invest in the AI sector without researching individual AI stocks. These ETFs provide a broad range of AI companies and stable returns. Here are some AI ETFs to consider for investment
- ROBO Global Robotics and Automation Index ETF – With cloud computing and other technology firms, ROBO invests in businesses with a strong AI emphasis. ROBO holds 80 equities, with no one holding, making up more than 2.2% of the value of the ETF. The fund’s top five holdings only account for 9% of its total value.
- Global X Robotics & Artificial Intelligence ETF – The Global X Robotics & Artificial Intelligence ETF was established in 2016 to invest in businesses that may profit from greater adoption and application of artificial intelligence and robotics. This covers companies involved in autonomous vehicles, integration, non-industrial robots, and industrial robotics. Forty-four stocks are presently held by it.
- First Trust Nasdaq Artificial Intelligence and Robotics ETF – The First Trust Nasdaq Artificial and Robotics ETF is focused on tracking the Nasdaq CTA AI and Robotics Index, composed of businesses involved in robotics and AI in the tech, business services, and other sectors. The ETF, launched in 2018, has more than 60% of its holdings comprised of tech firms. The ETF currently holds 108 stocks, with C3.ai, Luminar Technologies, and Atos among the top.
Investing in AI startups
As AI becomes increasingly integrated into our daily lives, its importance in shaping the future will only grow. With blockchain, cryptocurrency, robotics, and machine learning all heavily reliant on AI, venture capitalists are now turning their attention towards AI startups as a potentially lucrative investment opportunity. However, identifying and investing in such companies can take time and effort for retail investors. This is where crowdfunding campaigns can prove helpful, as individuals can track platforms like Republic and invest in AI startups according to their preferences.
In conclusion, investing in AI can be profitable for those willing to take on the risks and volatility associated with this emerging technology. The first step towards investing in AI is to determine your financial goals and risk tolerance and choose the right allocation strategy that works for you.
For those who prefer a buy-and-hold approach, buying stocks of AI-focused companies such as C3.ai or investing in an AI ETF like Vanguard can be a good option. On the other hand, those who are more comfortable with fundamental analysis and taking on more minor risks may consider investing in small-cap or penny stocks.
It is important to note that investing in AI requires thorough research and analysis to avoid potential losses. A sound investment strategy should also consider the advice of reputable fund managers and financial planners, such as Warren Buffett.
While the market for AI continues to fluctuate, it is clear that the role of AI in various industries will only continue to grow. With Wall Street and venture capitalists eyeing AI startups as a booming investment opportunity, individuals should stay vigilant and informed about the latest developments in the AI space. Ultimately, investing in AI can be a profitable and exciting venture with the right approach and mindset.
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