Investing in Artificial Intelligence: A Beginner’s Guide
The world is changing quickly, and artificial intelligence (AI) is playing a major role in the transformation. AI is already writing our kids’ essays, driving cars, producing new computer programs, and helping scientists seek cures for cancer. As AI continues to develop, it is becoming increasingly important for investors to understand how to invest in AI. This beginner’s guide will help you get started.
Artificial intelligence is already writing our kids’ essays, driving cars, producing new computer programs and helping scientists seek cures for cancer. Many experts say that for now, it is safer to invest in the companies that provide AI tools to the experimenters. Meanwhile, investors who are looking for broader exposure will want to check out Kiplinger’s roundup of the best AI ETFs.
Many AI-related stocks trade at more than 40 times next year’s expected earnings – about twice the level of the overall market. That creates challenges for investors interested in benefiting from AI but afraid of a repeat of 2000, when the dot-com bubble burst. AI demand helped boost Taiwan Semiconductor Manufacturing Co. (TSM) annual sales by roughly 30% in 2022, to about $73 billion. And Microsoft is licensing its AI services, such as its speech recognition model, so smaller companies can create their own AI applications. Broadcom has benefited from this year’s AI stock boom. The tech-heavy Nasdaq Composite index rose at almost double the S&P 500’s 17% pace in the first half of 2023. Nvidia executives said they expected sales of roughly $11 billion for the July quarter.
Investing in AI stocks can be a great way to benefit from the growth of the technology. However, it is important to remember that AI is still a relatively new technology, and it is important to do your own research before investing in any AI stocks.
When investing in AI stocks, it is important to consider the company’s long-term prospects. Some companies may be focused on short-term gains, while others may be investing in research and development to create new products and services that will benefit from the growth of AI. It is important to understand the company’s strategy and how they plan to use AI to their advantage.
In addition to researching the company, it is also important to consider the sector in which the company operates. Some sectors, such as healthcare and finance, may be more likely to benefit from AI than others. It is important to understand the sector in which the company operates and how the sector may benefit from AI.
Finally, it is important to consider the risks associated with investing in AI stocks. AI is still a relatively new technology, and there are still many unknowns. It is important to understand the risks associated with investing in AI stocks and to make sure that you are comfortable with the risk before investing.
Conclusion
Investing in AI stocks can be a great way to benefit from the growth of the technology. However, it is important to remember that AI is still a relatively new technology, and it is important to do your own research before investing in any AI stocks. When investing in AI stocks, it is important to consider the company’s long-term prospects, the sector in which the company operates, and the risks associated with investing in AI stocks. By doing your own research and understanding the risks associated with investing in AI stocks, you can make an informed decision about whether or not investing in AI stocks is right for you.
