How and Where to Invest in AI
Recent advancements in artificial intelligence (AI) have created massive opportunities for investment. Of course, not all of these opportunities are created equal. In the sections that follow, we’ll provide you with all the practical tips and insights you need to figure out how to invest in AI based on your specific needs. Whether you’re a seasoned investor or just starting out, you’ll find what you need to begin investing in a more profitable future.
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Table of Content
Why Invest in AI?
Here are a few reasons why investing in AI might be a smart move for your portfolio:
- Growth Potential The AI market is projected to reach $190 billion by 2025, with a compound annual growth rate of 36.6%. Additional forecasts predict that AI will contribute $15.7 trillion to the global GDP by 2030. That’s a lot of exponential growth, which could make an investment right now incredibly lucrative. Moreover, as we edge closer to the singularity, where AI surpasses human intelligence, the potential for unprecedented growth becomes even more apparent.
- Industry Shifts Recent advancements in AI have left businesses struggling to catch up. That leaves plenty of opportunities available for those able and willing to capitalize on the uncertainty.
- Future Trends AI has proven that it is here to stay. The sooner you invest, the sooner you can start reaping the benefits.
How can I invest in AI?
Choosing the right investment approach depends on your appetite for risk as well as your specific objectives. However, here are a few of the most promising options.
1. Invest in AI-focused Companies
One of the simplest ways to invest in AI is to focus on major tech companies. Obvious contenders include Alphabet, Microsoft, Amazon, and Meta. An alternative option is to pursue smaller, more specialized AI endeavors such as SoundHound or Symbiotic.
Whatever you pick, remember to conduct thorough research before making any financial decisions. Just because a company is involved in AI does not mean it is a sound investment.
2. Invest in AI Exchange Traded Funds (ETFs)
If you prefer a more diversified approach, consider investing in AI ETFs. These brokers typically hold a diversified portfolio consisting of numerous AI ventures. That way, you can gain exposure to a broad array of promising companies without the risk that comes from putting all your eggs in a single basket. Some popular AI ETFs include Global X Artificial Intelligence & Technology ETF (AIQ), Roundhill Generative AI & Technology ETF (CHAT), and iShares Robotics and Artificial Intelligence Multisector ETF (IRBO). As always, however, make sure you conduct extensive research into any ETFs before giving them your hard-earned money. While the diversification they offer may be safer, you still want to ensure it suits your purposes.
3. Invest Directly in AI Startups
Instead of focusing on already-proven businesses, you might instead pursue any of the countless AI startups out there. Such companies are often at the forefront of innovation and can provide significant returns if they succeed. However, it is definitely a high-risk, high-reward strategy since you have less of a guarantee that their business will prove viable.
In addition to performing a thorough analysis of their proposed business model and the current market, you should also ensure the company utilizes responsible AI development practices to mitigate any future liability or risks. If you lack the private capital or experience to do this yourself, consider partnering with venture capital firms or platforms that specialize in AI startups to access promising investment opportunities.
4. Invest in Venture Capital (VC) AI Funds
Many VC firms now run specialized AI investment funds, providing an alternative way to invest in early-stage AI startups. Some of the current top contenders include the following:
- Global Brain CorporationJapanese firm known for its emphasis on long-term growth across sectors such as AI, blockchain, and fintech
- Khosla VenturesCalifornian firm focused on early tech startups in areas from artificial intelligence to health and sustainability
- Lux CapitalA firm located in New York that invests primarily in early-stage AI startups which, in their opinion, best embody innovative ideas
These VC funds make it far easier to connect with emerging AI companies than doing it alone. However, they also require accredited investor status and have longer lock-up periods, so they may be better suited for those with greater financial experience.
5. Utilize AI Investment Platforms
Online investment platforms are another method you might use to gain easier access to private AI companies engaged in everything from self-driving cars to natural language processing. Here are a couple of the most popular:
- SharesPostEnables investing in late-stage, pre-IPO tech companies
- EquityZenLets individuals invest in private AI tech firms like Anthropic and Scale
- StartEngineAllows investing in AI startups with as little as $100
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6. Work with a Financial Adviser
Finally, if you don’t feel comfortable making investment decisions on your own, consider working with a financial adviser who specializes in AI. They can offer you personalized advice based on your financial goals and tolerance for risk. With the help of a competent adviser, even someone new to these sorts of investments can learn how to navigate the complex marketplace.
Factors to Consider when Deciding Where to Invest in AI
As should be evident from the previous section, there are a number of promising investment opportunities adaptable to any of your particular goals and requirements. AI applications continue to expand across many industries, from tech to automotive. Here are just a few of the most promising:
- Cloud providers (e.g., Amazon AWS, Microsoft Azure)
- Chip manufacturers (e.g., Nvidia, Intel)
- IoT/Automation (e.g., Google, Apple)
- Big data analytics (e.g., IBM Watson, Splunk)
- Advertising/Sales (e.g., Facebook, TradeDesk)
- AI/R&D (e.g., Alphabet, Baidu)
- E-commerce (e.g., Alibaba, Amazon)
All of these areas represent domains in which AI is likely to grow only more prevalent as time goes on, making them good candidates for enterprising investors. Regardless of where or how you choose to invest your money, though, consider these factors to help you evaluate the strength of a given opportunity:
- TeamDo the engineers and researchers involved have proven expertise working with AI? Do the founders have any prior leadership experience?
- ProductDoes what they’re selling solve a genuine problem?
- DataDo they have unique access to any domain-specific data that might give their AI a leg up over the competition? What about proprietary tech?
- TractionAre there any promising signs so far that customers are eager to adopt their product? Does revenue seem poised to increase?
- EthicsDo they follow responsible development practices?
Diversification of your portfolios is key, as not every AI startup succeeds. However, with diligent analysis, AI investments can reward patient investors handsomely over a long period.
The Future of Investments in AI
Investing in AI can be an immensely rewarding experience. Whether you choose to invest in established companies, promising startups, ETFs, VC funds, or a mixture of all of the above, it’s important to do your due diligence. You’re responsible for conducting the thorough research necessary to determine the best investment for your unique circumstances.
Investing in AI isn't just about financial gain; it's about participating in a transformative movement that's changing the world. Whether you're backing established giants or nurturing innovative startups, each investment contributes to shaping the future landscape of technology and society.
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Author, Expert in Email Strategy and Artificial Intelligence
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