Artificial intelligence (AI) is a hot topic right now. Since it came to light that tech giant Microsoft is going to invest billions of dollars in OpenAI’s AI-powered chat platform “ChatGPT,” everyone, from the boardroom to the classroom, has been talking about the technology.
Like any disruptive technology in its early days, there are many questions surrounding AI. Investors want to know what it is, and how it will impact the world. In this post, we will break down the technology for you, look at its potential, and discuss ways in which you can get portfolio exposure to it.
What is AI?
Artificial intelligence involves using computers to perform tasks that traditionally required human intelligence. It leverages the power of machine learning (ML) technology, which uses data and algorithms to teach computers how to learn from experience and make inferences about new data.
AI is an extremely powerful form of technology. For starters, it can be trained to perform a wide range of tasks including speech recognition, image detection, and problem solving. This means that it has a broad range of applications, from self-driving cars to cancer detection.
Secondly, it can dramatically drive down the time needed to perform tasks (computers can process large amounts of data in ways that humans can’t), leading to increased productivity for companies as well as major cost savings. With AI, simple repetitive tasks can be completely automated.
Third, it is available around the clock. Computers can operate 24/7 without interruption or breaks. This means that the technology can help companies produce more and provide better levels of customer service than they could with humans alone.
It is worth noting that while AI technology is still in its infancy, it is widely used by companies today. For example, Google uses it in its search engine to make sure the best search results are generated for users. Amazon uses it to forecast customer demand and generate tailored product recommendations. Meanwhile, Netflix uses it to predict what shows will appeal to users.
And the technology is constantly evolving and advancing, with new breakthroughs being made regularly. ChatGPT is a great example of this. This chat platform is able to write essays and poems, answer almost any question, and interact with humans in a conversational way. Given its extraordinary capabilities, ChatGPT has been a huge success with users. In the first two months after its launch, it registered more than 100 million users, making it the fastest-growing consumer web application in history. It is worth noting that Facebook took over four years to hit 100 million users.
The potential disruptive impact of AI on society is enormous
The increasing growth and development of AI technology is expected to revolutionise numerous industries, resulting in significant changes in the global economy. With the potential to enhance business operations and decision-making processes, AI is likely to disrupt almost every sector. For instance, banks can leverage AI to improve their lending practices and detect fraud more efficiently, while pharmaceutical companies can accelerate drug development through the application of AI. Similarly, construction companies can use AI to make faster, better-informed decisions related to their projects. As AI becomes more accessible and affordable, a growing number of companies will adopt it to optimise their business models. It is estimated that the global AI market will expand by approximately 40% each year, reaching a value of $422 billion by 2028, according to Zion Research.
By the way, this last paragraph was written in part by ChatGPT!
The different types of AI stocks
The growth of AI looks set to create lucrative opportunities for investors, however, there are many ways to invest in this area of technology.. Some examples of AI stocks include:
- Large technology companies — Companies such as Microsoft, Alphabet, Oracle, and IBM are very active in the AI space. All of these companies have made many AI-related acquisitions over the past decade, and are at the forefront of the AI revolution as a result.
- Semiconductor companies — AI systems require large amounts of data to train and refine their algorithms. And processing this data requires a huge amount of computing power. This is where semiconductor companies such as Nvidia and AMD come in. These companies develop chips designed specifically for AI applications.
- Cloud computing businesses — AI systems often rely on cloud computing services to access and process the large amounts of data they need to function effectively. This is where cloud computing companies such as Amazon come in. These companies offer cloud services that enable users to build AI-driven applications.
- Companies that are actively using AI — A broad range of businesses, ranging from robotics to healthcare companies, are already using the technology to become more competitive. An example here is American health insurance giant UnitedHealth. It has developed a centralised data platform that uses AI to improve patient outcomes by predicting conditions and decreasing the cost of care. Another example is AutoDesk, which has machine learning-based architecture software that is able to generate apartment layouts based only on words.
Copy Trading does not amount to investment advice.
The easier way to invest in AI
Although there are many companies that should benefit from AI, it is hard to know exactly which will succeed in the future. Therefore, to help investors gain exposure to AI stocks, eToro has developed the AI-Revolution Smart Portfolio. This is a fully allocated portfolio focused on companies that are active in the AI space.
The AI-Revolution Smart Portfolio invests in two main types of companies:
- Businesses focused on AI technology infrastructure. This includes companies that provide software and services for AI deployment, cloud computing companies, and semiconductor companies.
- Businesses that are actively using AI-related technologies to improve their offerings and become more competitive.
Designed for long-term investors, picked by top eToro analysts, this Smart Portfolio represents an easy and cost-effective way to invest in a broad range of top AI stocks.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
This communication is for information and education purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research.