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Artificial Intelligence Investing
How to Invest in Artificial Intelligence
Feb. 13, 2023 01:30PM PST
Learn how to invest in the growing artificial intelligence market, which is projected to reach more than US$1.8 trillion in value by 2030.
metamorworks / Shutterstock
Artificial intelligence (AI) has been pegged by some as sparking the fourth industrial revolution, with many industries and countries investing heavily in this emerging technology.
Grand View Research estimates that there will be massive growth in AI over the next several years, with revenues reaching more than US$1.81 trillion in 2030, up from US$136.55 billion in 2022. In January 2023, OpenAI's ChatGPT AI chatbot exploded onto the scene, bringing even more interest into the sector, although it is not yet possible to invest in that specific technology.
With that in mind, here the Investing News Network provides an overview of how to invest in AI for those interested in stepping into this complex and ever-growing sector.
What is artificial intelligence?
AI is defined as human intelligence exhibited by machines. A report from NVIDIA (NASDAQ:NVDA) states that AI is transforming the world and explains how its origins stretch back to the post-World War II era.
NVIDIA credits open-source frameworks for creating a revolution that has been backed by the development of graphics processing units with faster and more powerful chips that can support machine and deep learning.
While “Narrow AI” is currently in play, the natural progression is towards “General AI,” which in concept is a machine that has human senses and does things just like humans do.
AI and machine learning often get intertwined, but at the Viva Technology event several years ago, Eric Schmidt, chairman of Alphabet (NASDAQ:GOOG), explained the difference between these two aspects of the fourth industrial revolution.
Putting it into simple terms, Schmidt said that machine learning is how a system looks at complex sets of data and learns from this information, while AI is how the data is expressed. “We think of it as a human-like experience and intelligence, but what's really happened is that machine has learned from patterns,” he noted.
He pointed to Google’s Google Photos and Google Translate products as examples of AI and machine learning that are in play today, but said many believe the next generation of algorithms will be much more powerful.
What is the outlook for artificial intelligence?
According to Grand View Research, ongoing research from tech giants such as Alphabet, Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) is driving the adoption of AI in industries such as automotive, healthcare, retail, finance and manufacturing.
“For instance, from self-driving vehicles to crucial life-saving medical gear, AI is being infused virtually into every apparatus and program,” the report's authors state. The segment with the biggest market share is software solutions, which accounted for 36.7 percent of global AI revenue in 2022. By 2030, the healthcare sector is anticipated to have the leading share.
The report suggests North America will largely dominate the space due to its leading players, high government investment in AI and a strong technical base. Grand View Research believes the Asia-Pacific region will be the fastest-growing market thanks to improvements in information storage capacity, high computing power and parallel processing. The firm indicates that those three areas are part of why AI has been implemented so rapidly in industries such as automotive and healthcare.
Other market projections come from Precedence Research, which suggests the AI market will grow at a compound annual growth rate of 38.1 percent between 2022 and 2030 to reach more than US$1.59 trillion.
"The burgeoning demand for the artificial technology among the various end use verticals such as automotive, healthcare, banking & finance, manufacturing, food and beverages, logistics, and retail is expected to significantly drive the growth of the global artificial intelligence market in the forthcoming years," the firm notes.
How to invest in artificial intelligence?
With such growth potential in the AI market in the coming years, investors may very well want to dive into the sector. There are a number of ways to do so, including exchange-traded funds (ETFs) and stocks.
Artificial intelligence exchange-traded funds
For those who would rather invest broadly in AI rather than in a specific company, ETFs are a popular option. Here’s a brief overview of three AI ETFs for investor consideration:
- Global X Robotics & Artificial Intelligence Thematic (NASDAQ:BOTZ): The fund began on September 12, 2016, and its top holdings include Keyence (OTC Pink:KYCCF,TSE:6861), NVIDIA, ABB (OTC Pink:ABLZF,SWX:ABBN) and Intuitive Surgical (NASDAQ:ISRG).
- ARK Autonomous Technology & Robotics ETF (NYSEAMERICAN:ARKQ): This fund was started on September 30, 2014, and its top holdings are Tesla (NASDAQ:TSLA), Trimble (NASDAQ:TRMB), UiPath (NYSE:PATH) and Kratos Defense & Security Solutions (NASDAQ:KTOS).
- Robo Global Robotics and Automation Index (NASDAQ:ROBO): The Robo Global Robotics and Automation Index began on October 22, 2013, and its top holdings include Harmonic Drive Systems (TSE:6324), IPG Photonics (NASDAQ:IPGP) and Zebra Technologies (NASDAQ:ZBRA).
Artificial intelligence stocks
Investors looking to put money into AI stocks also have quite a few options available to them.
To help potential AI investors get an idea of the various sectors available to them under the AI umbrella, the Investing News Network has put together a number of lists:
These lists of AI companies of course provide only a small glimpse at the broader sector, but for those just learning about the AI investment opportunity they are a good place to start.
This is an updated version of an article originally published by the Investing News Network in 2018.
Don’t forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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