Artificial intelligence (AI) has undoubtedly changed many aspects of our lives, from how we work, meet people, discover information and even the careers we choose.
The rate of change in society spurred through the developments in AI will almost certainly accelerate as it becomes more accessible to companies and to the general public. Its usefulness and level of "intelligence" directly correlate to the processing power of computer processors.
What does this mean for you as an investor? AI is the leading supercycle in the technology sector and will have a profound impact on society. In this piece, we'll teach you how to invest in artificial intelligence as well as the best AI companies to invest in.
What is Artificial Intelligence?
Artificial intelligence is the field of computer science and engineering focused on the creation of intelligent agents, which are systems that can reason, learn and act autonomously. Intelligent agents can solve complex problems and adapt to their environment to achieve their goals.
In recent years, we've started using AI more and more in everyday applications, such as in search engines, personal assistants and self-driving cars.
There are a number of different approaches to AI, each with its own strengths and weaknesses. The three most common approaches include rule-based systems, decision trees and artificial neural networks.
Many AI researchers have an end goal in creating systems that can autonomously learn and improve upon their own skill sets without human intervention. Often referred to as artificial general intelligence (AGI), it is still considered well beyond the current state of AI technology.
How Companies Use AI
In recent years, AI investment has been on the rise in public companies. Businesses can use artificial intelligence in a number of ways, from automating tasks to improving customer service.
Companies use artificial intelligence to automate tasks, which can free up employees to focus on more important tasks or it can simply make the company run more efficiently. For example, a company might use artificial intelligence to automatically schedule appointments or to sort through emails.
Another way that businesses use artificial intelligence has to do with improving customer service. For example, a company might use artificial intelligence to chat with customers online or to offer them recommendations. Businesses can provide a better customer experience and increase loyalty using AI.
In addition to automating tasks and improving customer service, businesses can also use artificial intelligence to make better decisions. For example, a company might use artificial intelligence to help with financial planning or to make decisions about which products to stock. Ultimately, businesses can make better decisions faster and more accurately.
How to Invest in Artificial Intelligence
The rise of artificial intelligence has been one of the most transformational technological advancements in recent years. As the industry continues to mature, investors can get involved in a growing number of investing in AI opportunities.
Here are a few tips on how to invest in AI.
Step 1: Define your investment goals.
Before investing in any stock, it’s important to have a clear idea of your investment goals. Are you hoping to generate long-term growth or are you more interested in short-term gains?
Your investment goals will play a big role in determining which AI stocks are right for you. For example, if you’re primarily focused on long-term growth potential, you may want to consider investing in a company working on cutting-edge AI technology. On the other hand, if you’re more interested in near-term gains, you may want to look into companies already using AI in their businesses.
Step 2: Consider the company’s business model.
Once you have a better idea of your investment goals, you can start to narrow down your options by considering the business models of different AI companies.
Some AI companies focus on developing and selling AI software and platforms, while others use AI to power their own internal operations. A number of companies also use AI to develop new products and services.
Some AI tech stocks apply their stack to optimize the growth of hemp and marijuana. Check out MarketBeat's list of marijuana stocks.
Each of these business models comes with its own set of risks and rewards, so it’s important to understand how each one works before making any investment decisions.
Step 3: Research the AI market.
Investing in AI stocks can be a complex process, so do your homework before making any decisions.
Read industry reports from analysts and research firms to research the AI market to give you a better idea of the current state of the AI market and the trends driving its growth.
For other kinds of stock market investing ideas, you can check out Marketbeat's stock lists.
Step 4: Consider investing in an AI ETF.
Not sure which AI stocks to invest in? You may want to consider investing in an AI exchange-traded fund (ETF). AI ETFs are a type of investment fund that tracks a basket of AI-related stocks.
Investing in an AI ETF can be a good way to diversify your exposure to the AI market. Because AI ETFs are traded on major exchanges, they can be easily bought and sold just like any other stock.
Step 5: Seek professional advice.
Investing in AI stocks can be a complex process, so it’s important to seek professional advice if you’re not sure where to start. A financial advisor can help you assess your investment goals and risk tolerance and develop a personalized investment plan.
A financial advisor might recommend learning how to invest in stocks with increasing dividends if you want to grow your income.
Leading Companies in AI
Here are some of the best AI companies to invest in as a stock investor.
Note that as leaders in AI, they are very much unlike certain types of stocks like penny stocks which can be bought for $5 or less. Companies on this list commonly sell for $80 or more.
Alphabet Inc. (NASDAQ: GOOGL) is an American multinational technology conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015, and became the parent company of Google and several other former Google subsidiaries.
Alphabet is considered a FAANG stock as one of the leaders in the tech sector. (Learn more about FAANG stocks.)
Alphabet has made an increasingly large amount of AI investments. In 2017, Alphabet announced the creation of a new company called Verily, with the goal of developing health-tracking and disease-prevention technologies using AI and machine learning.
In addition, Alphabet's Google unit has worked on developing its own AI assistant, Google Assistant, which is available on the Google Home smart speaker and other devices. Google Assistant is a direct competitor to Amazon's Alexa assistant.
Nvidia Corporation (NASDAQ: NVDA) is an American technology company based in Santa Clara, California. Nvidia designs graphics processing units (GPUs) for the gaming and professional markets as well as system on a chip units (SoCs) for the mobile computing and automotive market.
Nvidia has been a long-time player in the AI investment space with its compute unified device architecture (CUDA) platform and GPUs. Nvidia also introduced its new Volta architecture, specifically designed for deep learning and AI.
Nvidia has positioned itself as the leading AI platform company with its new Volta architecture. Nvidia's GPUs are already being used by major tech companies such as Google, Facebook and Baidu for deep learning and AI applications. Nvidia is also working on self-driving cars and has partnered with major automakers.
C3.ai Inc. (NYSE: AI), based in Redwood City, California, specializes in AI and machine learning.
C3.ai provides a platform as a service (PaaS) that enables organizations to develop and deploy AI and machine learning applications. The company's flagship product is the C3 AI Suite, which is a cloud-based software platform that includes a library of pre-built AI and machine learning models. A variety of organizations use the C3 AI Suite, including General Electric, Hitachi and the United States Air Force.
In addition to the C3 AI Suite, C3.ai offers a number of other products, including the C3 IoT Platform, a PaaS that enables organizations to develop and deploy Internet of Things (IoT) applications and the C3 Energy Platform, a PaaS that enables organizations to develop and deploy energy applications.
International Business Machines (IBM) Corporation
IBM Corporation (NYSE: IBM), headquartered in Armonk, New York, is one of the largest and most influential companies in the world and one of the most important players in the development of artificial intelligence.
IBM has worked on AI since the 1950s. It was one of the first companies to develop digital computers, which laid the foundation for AI research. In the 1970s, it developed the first AI software program, called ELIZA. ELIZA was a simple chatbot that could mimic human conversation.
Since then, IBM has moved on from ELIZA to Watson, designed to help businesses harness the power of AI to improve decision making, automate processes and gain insights from data. Watson is used across a variety of industries, from health care to finance to retail.
Microsoft Corporation (NASDAQ: MSFT), headquartered in Redmond, Washington, is one of the leading tech giants and has been at the forefront of many technological advancements, including AI. The company has been investing in AI for many years and has built up a strong portfolio of AI-related products and services.
Microsoft’s Azure cloud platform provides a comprehensive set of AI services, including cognitive services, bot services and machine learning. These services allow developers to add AI capabilities to their applications. Azure also provides a managed service for deploying and managing machine learning models.
In addition to its products and services, Microsoft also invests in research to advance the state of AI. The company has established the Microsoft research lab, which is devoted to AI research. The lab is working on a number of projects, including developing new algorithms, improving existing AI technologies and exploring the ethical and societal implications of AI.
Amazon.com Inc. (NASDAQ: AMZN), headquartered in Seattle, Washington, is one of the most popular stocks on the market and one of the most popular artificial intelligence companies. Amazon is known for its customer service, its wide range of products and its cutting-edge technology.
Amazon has been working on AI for a long time. The company acquired the AI startup, Orbeus, back in 2015. Orbeus was working on a technology called ReKognition, which used AI to identify objects in images. Amazon uses this technology to improve its image search capabilities.
In addition to its acquisition of Orbeus, Amazon has also been working on its own AI technology. The company developed a digital assistant called Alexa, powered by machine learning and natural language processing.
The company also uses machine learning to improve its recommendation engine. This engine provides product recommendations when shopping on Amazon.
AI Has Enormous Potential
AI features heavily in science fiction as it leads humanity into a new prosperous (or dystopian) future.
Regardless of what will happen long-term, we should focus on the fact that it's heavily in demand and will provide companies with unmatched competitive advantages to those who embrace it, making them attractive additions to most portfolios.
Here are some answers to the most frequently asked questions (FAQs) about investing in AI.
What's the best way to invest in AI?
First, define your investment goals. Your goals could involve choosing a stock for a short-term momentum play or as a long-term holding. Next, scope out companies found in this list and do your due diligence by researching financials, competitive advantages and catalysts which could propel stock prices in the future.
Can I invest in AI?
You can invest in AI public companies by buying stock via brokers. Although the prominence of AI continues to rise, it may take a decade or more for it to fully unleash its potential, so prepare to hold these companies for the long term.
Which company is leading in artificial intelligence?
Alphabet is sometimes cited as one of the best general AI companies. Other stocks like Microsoft and Amazon can leverage the technology in more specialized ways to meet business objectives.