The Motley Fool

3 Ways You Can Invest in Artificial Intelligence

It is no secret that Artificial Intelligence (AI) is slowly reshaping the world that we live in. While we have been hearing the buzzword for many years now, 2018 was a breakthrough year in many respects.

The big reason for this is the proliferation of big data and faster central processing units that have powered deep learning. Deep learning is one part of machine learning methods that are based on the layers used in artificial neural networks that create the AI we are seeing today.

PricewaterhouseCoopers has estimated that AI will add around US$15.7 trillion to the global economy by 2030. With that said, here are three ways that investors can get in on the action.

Buy software companies

Right now, the companies with the biggest exposure to artificial intelligence are the big software companies. These companies have made big bets on the technology and have the cash flow to continue pouring money into the technology.

AI is powering, and changing, all industries from e-commerce to autonomous driving. What’s more, with the rapid rise of cloud computing and the importance of Software-as-a-Service (SaaS) companies more broadly, monitoring how software companies are integrating AI into their business strategies will be an important sign of the progress of this exciting technology.

Buy an AI-proxy fund

There are some private equity funds in the market that are focused on investing in AI startups. However, these funds may require large investment capital and are perhaps only available to accredited investors. Perhaps more accessible to the everyday investor are AI Proxy Exchange Traded Funds (ETFs). For instance, Technology Select Sector SPDR Fund invests in technology equities. By investing in an AI-proxy fund you can gain exposure to a wide array of AI-related companies all under a single ticker.

Buy chip makers

Investors can also choose to invest in the chip makers that are building the hardware that is making AI possible. Many of the big chip firms are producing semiconductors that are powerful enough for AI. Select companies have established themselves as market leaders (for example in the chips capable of powering the AI required for self-driving cars) but others have already recognised the massive potential of AI and invested heavily to compete in the next few years.

The AI chip market is forecast to hit US$35 billion by 2021, up from just US$6 billion in 2015. That’s a five-fold increase in just five years!

The Foolish bottom line

These are certainly exciting days, with AI set to completely remodel the way we live. Investors who can take advantage and invest early in this technology could potentially be well-rewarded in the future.

 

Motley Fool Singapore believes the Artificial Intelligence mega-trend is one investors can NOT afford to miss out on. We think it has the potential to be bigger than the Internet, with the AI industry set to be worth US$5.8 trillion per year to the global economy. Click here now to find out more about a collection of AI stocks that are taking the lead and how they could supercharge your investment returns.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.