The recent release of the ChatGPT “chatbot” has reinvigorated interest in artificial intelligence. ChatCPT can write your resume for you, produce a college term paper, and do these jobs in minutes following your instructions. Colleges and universities are concerned about how to know if to give an “A” to a student or their AI program. Microsoft has taken a $10 billion stake in OpenAI, the company that created ChatGPT. This should bring up the question, how can you invest in AI?
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Investing in New Technologies
When desktop computers were invented, they ended up being used by businesses far and wide. The money was made by those who made computers or by those who developed the software that makes computers useful. Apple invented the personal computer and the computer that we carry with us and make phone calls with (smartphone). Microsoft provided IBM with the operating system for their PC and still dominates the software market for business and personal use. As AI becomes more and more a part of our everyday lives those who employ it effectively will make money. Those who create the software and hold the patents will make a lot of money. Who will those folks be?
What Is AI?
AI stands for artificial intelligence. AI programs or machines are said to “think” or “reason” independently based on their access to and ability to quickly analyze vast amounts of information. The goal is to make these programs or machines think like humans, only faster, more accurately, and more creatively. AI is commonly used to make predictions in situations that require processing of huge amounts of data. The ideal is for the AI to identify patterns not seen by humans who have less data access and less processing power. The holy grail of AI is to be able to learn from experience in order to get steadily smarter and faster.
Niches for Investing in AI
An obvious investment in AI would be a company that makes an AI tool like ChatGPT. Like many Silicon Valley startups the early money comes from insiders followed by big companies like Microsoft that want early or even exclusive access to the technology. Such companies may or may not go public before being taken over by the Microsoft’s of the world. In this regard the current FTC fight with Microsoft is pertinent. Microsoft wants to acquire Activision Blizzard and the FTC is trying to prevent the creation of a monopoly instead of going after one after the fact. If the FTC is successful, it may make more AI investments available to average investors.
Companies Making More Money by Using AI
As companies find targeted uses for AI, they ought to become more profitable. Those that incorporate AI into their products such as with autonomous vehicles like with Tesla could be even more profitable. Such companies could be more profitable than those that create pure AI products and services as they will be adapting AI to a wide variety of uses.
AI ETFs as an Investment Vehicles
Finding and vetting the most promising stocks in the AI niche may be more work than the average investor is interested in doing or has time for. In such a case a viable approach would be to invest in an ETF that, in turn, offers a mix of artificial intelligence stocks. These folks have the time and expertise to do the research and keep up with changes in the field. Here are some AI ETFs.
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