Learn how to invest in the growing artificial intelligence market, which is projected to reach nearly US$1 trillion in value by 2028.
Grand View Research estimates that there will be massive growth from AI over the next several years, with revenues reaching more than US$1.8 trillion in 2030, up from US$93.53 billion in 2021.
Meanwhile, a report from the McKinsey Global Institute predicts that the potential value of AI could reach US$13 trillion annually by 2030. With a large majority of companies across nine business functions in 19 industries making investments, AI has the potential for over 400 use cases and applications, such as regression analysis, statistical inference, clustering and recurrent neural networks.
With that in mind, here the Investing News Network provides a comprehensive look at how to invest in artificial intelligence, with an overview of how investors can step into this ever-growing sector.
What is artificial intelligence?
It credits open-source frameworks for creating a revolution 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.
Schmidt has said that machine learning is “how the system looks at the complex sets of data” and learns from the data, while AI is how the data is expressed.
Further, Schmidt has noted that the terms are used interchangeably, pointing to Google’s Google Photos and Google Translate products as examples of AI in play.
“We think of it as a human like experience and intelligence but what really happened is that machine has learned from patterns,” he said.
The evolution of artificial intelligence
The evolution of AI is moving at a rapid speed, as shown by NVIDIA, which just a few years ago unveiled a technique that allows robots to work with humans. It was created using a deep learning-based system that the company’s research team claims is the first of its kind.
Deep learning is a subset of machine learning and AI. While machine learning is seen as an approach to achieving AI using large amounts of data and coding, deep learning goes a step further.
In this technique, multi-layered artificial neural networks are used to deliver state-of-the-art accuracy in tasks such as: object detection; speech, image and facial recognition; and language translation.
Google itself has been pushing for AI in recent years. At an I/O conference in 2018, the company displayed a host of products that make use of AI. Of note from the conference was a new technology called Google Duplex, which is an evolution of Google Assistant.
Small startups are also making investments in AI, with the top area being the global medical care industry. These healthcare artificial intelligence startups are using new techniques to cure or diagnose cancer and are finding new ways to discover drugs.
The mining industry is also benefitting from applying AI technology in the search of new mineral deposits. “Data is going to change exploration — artificial intelligence is the way of the future,” stated SensOre (ASX:S3N) CEO Richard Taylor, whose company is developing disruptive mining technology that combines AI and machine learning to identify and confirm mineral deposits.
Outlook for artificial intelligence
According to Grand View Research, ongoing research from tech giants such as Google, Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) is driving the adoption of AI technologies 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,” as per the report’s authors.
The segment with the biggest market share is software solutions, accounting for 38 percent of the global AI revenue in 2021. By 2030, the healthcare sector is anticipated to have the leading share.
The report states that North America will largely dominate the space due to high government AI investment, leading players and a strong technical base.
In terms of the fastest-growing market, the report notes that the Asia Pacific region is at the top of the list thanks to improvements in information storage capacity, high computing power and parallel processing. The report indicates that those three areas have been a part of why AI has been implemented so rapidly in industries such as automotive and healthcare.
Other market projections come from Research and Markets, which suggests the AI market will grow at a compound annual growth rate of 32.8 percent between 2020 and 2027 to reach US$341.4 billion.
Fueling that growth will be AI solutions such as virtual assistants, marketing, search advertising, identity access management, intruder detection and cybersecurity for the future.
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:
For those who would rather invest broadly 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 NVIDIA, Intuitive Surgical (NASDAQ:ISRG), Keyence (OTC Pink:KYCCF,TSE:6861) and ABB (OTC Pink:ABLZF,SWX:ABBN).
- ARK Autonomous Technology & Robotics ETF (NYSEAMERICAN:ARKQ): This fund was started on September 30, 2014, and its top holdings being Tesla (NASDAQ:TSLA), Trimble (NASDAQ:TRMB) 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 iRobot Corp (NASDAQ:IRBT), Intuitive Surgical and Rockwell Automation (NYSE:ROK).
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.
With so much growth in AI anticipated over the coming years, now more than ever may be the time for tech-savvy investors to jump into this space.
This is an updated version of an article originally published by the Investing News Network in 2018.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.