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.
Allied Market Research estimates that there will be massive growth in AI over the next several years, with revenues reaching more than US$3.64 trillion in 2033, up from US$153.6 billion in 2023.
Last year was an inflection point in the AI market following the launch of OpenAI's ChatGPT AI chatbot, prompting some of the world’s biggest tech companies such as Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA) and Alphabet’s (NASDAQ:GOOG) Google to advance on their own AI initiatives.
As we move deeper into 2024 and beyond, AI technology is taking root across a myriad of industries from healthcare and finance to manufacturing and transportation.
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 by IBM (NYSE:IBM) as “technology that enables computers and machines to simulate human intelligence and problem-solving capabilities”. As concrete examples of AI, the tech firm lists digital assistants, GPS guidance, autonomous vehicles, and generative AI tools (like Open AI's Chat GPT).
AI and machine learning often get intertwined, but they are not the same thing. Putting it into simple terms, machine learning is a subset of AI. It's how a system looks at complex sets of data and learns from this information, while AI is how the data is expressed.
The rapid development of machine learning and subsequently AI technology in recent years can be attributed to significant advancements in graphics processing units (GPUs) which have allowed for the creation of powerful chips that can support machine learning and the training of AI models.
What is the outlook for artificial intelligence?
According to Allied Market Research, advancements in big data and the need to quickly analyze large datasets to generate actionable insights have contributed greatly to the accelerated adoption of AI technologies.
The research firm sees the healthcare, banking, automotive, and e-commerce industries as sectors for continued growth in new AI applications. In addition, AI-driven automation and robotics are also driving growth in this market. 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.
For its part, Fortune Business Insights is projecting a value of US$2.74 trillion for the AI market by 2032. The firm expects to see more partnerships and collaboration, a rise in small-scale AI providers, and increasing government investment as helping to grow the market space. The report’s authors point to Asia-Pacific as the region which will see the most growth over the forecast period, driven in large part by “China’s dominance over AI research”.
Narrowing down to the generative AI market, Grand View Research is forecasting that this segment of the overall AI market will see a compound annual growth rate of 36.5 percent to reach US$109.37 billion by 2030.
The report finds that the software segment is likely to account for the highest revenue share over the forecast period. “Rising use of generative AI-based software owing to its benefits, such as better image resolution, reduced conversion time, enhanced performance, and quick availability of output is attributed to market growth,” stated the firm.
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 NVIDIA, ABB (OTC Pink:ABLZF,SWX:ABBN), Intuitive Surgical (NASDAQ:ISRG) and Keyence (OTC Pink:KYCCF,TSE:6861).
- ARK Autonomous Technology & Robotics ETF (NYSEAMERICAN:ARKQ): This fund was started on September 30, 2014, and its top holdings are Kratos Defense & Security Solutions (NASDAQ:KTOS), Tesla (NASDAQ:TSLA), Teradyne (NASDAQ:TER), and Trimble (NASDAQ:TRMB).
- 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 Intuitive Surgical, Rockwell Automation (NASDAQ:ROK), 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:
- 5 Canadian Artificial Intelligence Stocks
- ASX AI Stocks: 5 Biggest Companies
- AI Stocks: 9 Biggest Companies
- 12 Generative AI Stocks to Watch
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.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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