How to Invest in Artificial Intelligence
Artificial intelligence (AI) is a very advanced technology that aims to create machines that imitate human behaviour and abilities as faithfully as possible. The latest AI development that has amazed the world is ChatGPT which is about to be followed by Google’s Bard. In this tutorial, we will tell you the most interesting aspects of artificial intelligence and how you can invest in companies with so much potential in this sector.
What is Artificial Intelligence?
Artificial Intelligence or AI is defined as the ability of programs and machines to present the same capabilities as human beings. These skills include, among others: reasoning, learning, creativity and the ability to plan. Through Artificial Intelligence, technological systems are related to the environment, so they can work autonomously and adapt their behaviour based on the effects of previous actions.
|Integrated artificial intelligence||Robots, drones, autonomous vehicles or the IoT (Internet of Things).|
|Artificial intelligence software||This category includes virtual assistants, search engines, voice and face recognition systems.|
History of artificial intelligence
If you want to invest in artificial intelligence, you should first know that its history is very recent. In fact, the boom of this technology has occurred in the last 10 years and the last chapter is led by the OpenIA company with its revolutionary ChatGPT, which we will talk about later.
Below we review some of the most prominent events in the development of artificial intelligence.
|1950||Alan Turing introduces the concept of algorithm in his article on computable numbers and creates the ‘Turing Test’.|
|1956||Computer scientist John McCarthy, at the Darmouth Conference, coined the term Artificial Intelligence for the first time.|
|1966||Joseph Weizenbaum develops “ELIZA” at MIT, which could be said to be the first chatbot language in the world.|
|1997||World chess champion Gary Kasparov is defeated by the Deep Blue supercomputer, created by IBM.|
|2011 to 2014||The launch of the virtual assistants Siri, Google Now and Cortana takes place.|
|2016||Google’s Alpha Go artificial intelligence software faced the South Korean Se-Dol, world champion of Go, a millennial game of very complex strategy, in a game of five games.|
How to invest in artificial intelligence
There are different ways to invest in companies related to artificial intelligence. The most common ways to invest are through:
- AI actions
- ETFs and investment funds in artificial intelligence
- Financial derivatives such as CFDs in AI
Invest in AI Stocks
This is the most traditional way to invest in artificial intelligence of the three options listed. In it, a percentage of the share capital of a certain company is purchased, assuming the risk of the operation.
|✅ This form of investment has its advantages, such as the right to vote of the shareholders, which allows you to participate in the company’s decision-making.|
|❌ It also has its disadvantages, such as maintenance and custody costs or that potential profits can only be obtained with the upward evolution of the value of the securities of a certain company.|
What AI stocks can we invest in?
In this sector there is room for large technology companies, such as Amazon, Facebook, Apple, Netflix, Google or Microsoft.
Precisely, on January 23, Microsoft announced a new multimillion-dollar investment in OpenAI, a startup that has amazed the world with chatGPT, an artificial intelligence chat system capable of holding conversations in a natural way and providing information in a very accurate way.
This competition between the big technology companies can make artificial intelligence take a giant step in the coming years. At the moment you can’t invest in ChatGPT because the company behind it, OpenAI, has not gone public (as of January 23, 2023). However, it can be indirectly invested in the development of this technology through Microsoft or, more recently, Google.
With Admirals you can invest in Microsoft shares, both spot and through Contracts for Difference (CFDs). Below we leave you an analysis of the price of the shares of this company as an example of how to invest in artificial intelligence.
Microsoft is in itself one of the most valuable companies on Wall Street, so we are talking about a consolidated and quality company that, in addition, sneaks into the list of companies to take into account to invest in artificial intelligence.With his investment in OpenAI, he demonstrates his commitment to artificial intelligence and its development.Microsoft’s price chart shows that significant inflation and extensive technology value decline in 2022 hurt its income statements. In this setting, significant sector corporations like Microsoft have announced layoffs, including 6% of its employees.
The long-term chart reflects an upward trend that began in December 2018 and lasts until November 2021, a period in which technological values beat high after high, gaining a greater boost as a result of the lockdowns due to the Covid-19 pandemic, from which they benefited.
Inflation and central banks’ aggressive interest rate hikes ended that trend. Microsoft has often tried to break its bearish channel. After forming a double floor on 220 USD support, the price was seeking to break 244 USD resistance at the time of this update.
Trading AI with CFDs
CFDs, a derivative instrument, can be used to invest in artificial intelligence.
The gains or losses of CFDs are determined by the difference between the entry price in the title and its exit price.
|✅ Trading artificial intelligence stocks offers modest initial investments and the ability to speculate both up and down.|
|❌ Among its disadvantages are that it is a leveraged product and may not be suitable for all types of investors. Trading with CFDs usually involves a series of associated costs related to the opening of positions and maintaining them.|
You can trade CFDs on the shares of the big technology companies but also with other companies related to artificial intelligence, such as Nvidia, Dynatrace, Alteryx, Okta, Splunk or Twilio.
Investing in artificial intelligence ETFs
Exchanged funds or ETFs (Exchange Traded Fund) of artificial intelligence are products that have gained attractiveness in recent years. These are collective investment vehicles, whose assets are made up of the contributions of the different investors. There are many ETFs that are focused on Artificial Intelligence, some of which are:
- Global X Robotics & Artificial Intelligence (BOTZ): invests in industrial robotics and automation, non-industrial robots, and autonomous vehicle firms that may benefit from increased adoption and application of robotics and AI.
- iShares US Technology: replicates the investment results of an index composed of US stocks in the technology sector.
- Vanguard Information Technology: Replicates the information technology sector using passive and sampling strategies if required by regulators. It contains shares of companies that serve the electronics and computer industries or make cutting-edge tech items.
- iShares Nasdaq Biotechnology: The iShares Nasdaq Biotechnology ETF replicates an index composed of biotechnology and pharmaceutical stocks listed on the NASDAQ.
- Technology Select Sector SPDR Fund: The ETF replicates the technology sector of the S&P 500 index. It comprises hardware technology firms, storage and peripherals, software, communications equipment, semiconductors, IT services, and equipment, instruments, and electronics.
- First Trust Dow Jones Internet Index: The ETF replicates the Dow Jones Internet Composite IndexSM.
Since June 2020, the Global X Robotics & Artificial Intelligence ETF has been rising in its daily trading chart.
This ETF’s trend and volatility can be examined together. The ETF’s price hasn’t changed much because the indication has been flat.The Ukraine war in February 2022 boosted the indicator again.Standard deviation rises as the price is farther from its 10- and 20-period moving averages (green and yellow).
The standard deviation is back to normal and the moving averages are rising, suggesting the trend may continue. It is important to note that this is only an interpretation based on a series of indicators currently available. Which does not guarantee that this result will occur.
The artificial intelligence sector is one of the most advanced in the last decade. Large technological businesses, using AI to predict human behavior, dominate this market. OpenAI technology is increasing competition between them, so good news may be coming.
This page lists some companies where you can invest in AI or trade, depending on your preferences.