It’s topic number one, and not just in the tech space: Artificial intelligence (AI). AI is defined as the science and engineering of making intelligent machines, especially intelligent computer programs, that have the ability to learn, reason, generalise and infer meaning. The rapid pace of innovation in AI has brought many experiences to reality that were previously only thought to be fiction. Tools such as ChatGPT have reached record-high usage rates in recent months. Even if its popularity is considered hype by some, one thing is certain: The potential impact of AI on industry, businesses, and investors is enormous.
Why should you consider investing in AI stocks?
As AI continues to disrupt how we live and work, how can you, as an investor, put your money to work in this sector that is quickly reshaping society?
AI attempts to replicate human intelligence in a computer or machine with faster speed and greater accuracy. Companies like Microsoft (MSFT) and Google (GOOGL) employ the technology to program machines to solve problems, answer questions, and conduct tasks previously done by humans.
As systems become more intelligent, AI becomes more powerful, and its uses and applications reach every stock sector and industry. For example, the transportation industry is undergoing a massive transformation around electric and AI-powered autonomous vehicles, potentially bringing trillions of dollars to the global economy. Similarly, the banking industry uses AI to improve decision-making in high-speed trading, automate back-office processes like risk management, or even reduce costs by using humanoid robots in branches. And those are only a few examples of artificial intelligence applications, making it a sector with huge potential.
Analysts at International Data Corp. (IDC), predict that worldwide revenues for the AI market could reach USD 900 billion by 2026 – an annual growth rate of 18.6% from 2022-2026.
Watch out for sector-specific investments
All of these could be good reasons to consider investing in AI stocks, but they are based on what we’ve already experienced. No one knows what the future holds and whether AI will continue to be so important or become a bubble.
Investing in such a specific sector, in which you rely exclusively on AI companies, also has potential risks that you must be aware of. As with any investment, there’s always a possibility of losing some or all of the money you’ve invested.
Diversification is therefore an important strategy when it comes to creating a portfolio. At Inyova, all portfolios contain 30 to 40 stocks compiled from different industries, countries, and other factors. This minimises the impact an individual share has on the total value of your portfolio.
3 AI stocks you can invest in with Inyova
We’d now like to introduce you to three companies you could invest in. Their AI stocks come from a range of opportunities within this sector. All three can be included in your diversified Inyova portfolio. Please keep in mind that this is not investing advice.
Nvidia
Founded in 1993, Nvidia is a trailblazer building the hardware for the AI industry. They make GPUs (Graphics Processing Units) which are used in data centers around the world. Machine learning and AI requires a LOT of computing power in the ‘training’ phase, and the recent explosion in this kind of machine learning has led to a significant boost in demand for Nvidia’s chips.
Currently, Nvidia owns about 95% of the GPU market for machine learning. ChatGPT was trained using 10,000 of Nvidia’s GPUs clustered together in a supercomputer belonging to Microsoft.
Nvidia also supplies software development tools to build artificial intelligence applications.
Alphabet (Google)
Alphabet, Google’s parent company also has exposure to AI.
As a technology giant, Google has one of the most impressive collections of datasets that can be used to ‘train’ machine learning algorithms.
Google’s cloud computing platform has a large selection of AI products making AI-based tools more accessible, for example, PaLM API and MakerSuite that allow developers to quickly build and test LLMs (Large Language Models) without a machine learning background.
Google has also launched a generative-AI-based chatbot to compete with the likes of ChatGPT called ‘Bard’. This is currently not accessible within the EU due to data privacy and protection regulations but is being used in other countries around the world.
Many of Google’s services utilise AI: YouTube uses AI to auto-generate captions for videos, AI powers Gmail’s spam filter and uses AI for autocomplete, and their Search product can let you search with an image or even by humming a tune due to AI. Google Translate and Google Lens are entirely based on AI technologies, like optical character recognition and machine learning.
Google also funds and publishes a lot of cutting-edge research into AI, including the ethics and potential risks arising from AI and other security risks.
Microsoft
Microsoft has seen its shares increase drastically this year. The company made several investments in OpenAI, the company behind ChatGPT, including a recent USD 10 billion round after ChatGPT was released.
They also have a long-term partnership with OpenAI and have integrated elements of ChatGPT into their search engine Bing and internet browser Edge. They plan to incorporate more GPT-based features into Microsoft Office and their cloud infrastructure service, Azure.
Microsoft also provided the supercomputer used to train ChatGPT.
Disclaimer: In addition to the companies mentioned above, there are many other champions in the category. Please note that this is not investment advice.
Invest in AI with Inyova
If you want to invest with purpose and are interested in AI stocks, Inyova is here to help. Our free online tool allows you to select the topics or causes that are important to you, including “AI & digital champions”.
At Inyova, we value broad diversification, which means that your Inyova portfolio will consist of approximately 30 – 40 stocks from different industries, countries, and focuses.
By diversifying your portfolio, you reduce the risk that a solely industry-specific investment will not materialise, or that an individual company will have an extreme impact on the value of your assets. As seen over the past hundred years, a diversified portfolio can generate an annual return of about 6-7%.
Investing with Inyova, and therefore contributing to a more sustainable future, is easy.
Create your free Impact Investing Strategy now.
Please note: The past performance of financial markets and instruments is never an indicator of future performance.
How to invest in AI stocks with Inyova in 4 easy steps
Creating your portfolio and corresponding strategy with Inyova is fun, fast, and easy – you can start with as little as CHF 100 for pillar 3a investments or regular investments. Here’s how:
- Create a free Inyova account
- Choose the impact topic “AI & digital champions” and other topics that are important to you
- If you have a particular favourite, you can also search for and wishlist it!
- Answer the questions and allow us to create your strategy.
It’s that simple. You’re now ready to make an important contribution with your investment. Have fun investing!
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