How to Invest in Artificial Intelligence Like a Pro

August 16, 2021

Man trading AI stocks

comments

How to Invest in Artificial Intelligence Like a Pro 

“When things get complicated, it’s easy to lose sight of the fundamentals.” 

Artificial intelligence is the new oil of our tech-driven economy, with a market size expected to grow 20% or more every year by 2026. While you don’t need supercomputer intelligence to start investing in AI, there are a few things you need to know that will help you cut through the noise and avoid rookie mistakes. 

There’s no industry standard definition for artificial intelligence 

Before you invest in AI, make sure it’s actually AI! The market is awash with snake oil because its complexity makes AI difficult to define and measure. While the official definition of artificial intelligence describes a machine that can think like a human, different companies and industries have different ideas and standards for what AI should be able to do. Eager companies like to use this to their advantage, putting the cart before the horse to raise capital. 

“It’s becoming clear that if you have a website, you are now AI,” said Anand Sanwal, CEO at the data research firm CB during the 2017 AI bubble. 

You don’t need to learn to code but having a grasp of AI’s basic principles as well as the difference between machine and deep learning will help you navigate the hype as you begin to invest in AI. These resources can help you get started. 

  • Investopedia’s definition of AI – Article
  • Crash Course: Artificial Intelligence – Video Series
  • Towards Data Science: AI VS Machine Learning VS Deep Learning – Article • “Evil Robots, Killer Computers, and Other Myths: The Truth About AI and the Future of Humanity” by Steven Schwartz – Book

Engineers don’t have all the answers 

With the average person less informed and no clear standards, there’s often more smoke than fire. Sometimes, however, AI companies focus too much on the tech and lose sight of the product as a whole. That’s because engineers don’t always think like their users. Most users – individuals and enterprises – don’t care as much about how advanced the software is. They care about its usability and the tangible impact it has on their lives. 

Artificial intelligence is designed to solve problems but sometimes, the complexity of a product and a poor UX can create just as many problems as it solves. Watch out for complexity dressing itself up as innovation. The customer is always right. 

Diversify your AI investment strategy 

Pundits have a hard time agreeing on pure-play AI stocks because many of the most notable ones like Amazon and Facebook do a lot more than just artificial intelligence. While Amazon uses AI in everything from its supply chains to its recommendation algorithms, we don’t usually think of ourselves as buying artificial intelligence from them. Instead, we focus on the products their AI supports like a Prime subscription or Amazon Web Services. 

If you invest in Big Tech, you already invest in AI and for many investors, this is their preferred AI investment strategy. Right now, judging the value of these stocks requires you to look beyond AI to everything it helps companies create. Over time, however, investments from Big Tech into artificial intelligence could produce new, AI-driven products that become a larger part of their valuation. 

That corner of the AI market is occupied by companies like Nvidia, C3.ai, and Palantir, where artificial intelligence lies closer to their core business. Nvidia is often considered a pure-play AI stock for its computer graphic chips, while C3.ai, Palantir, and others

offer enterprise-level tech and services, designed to scale personalized AI solutions for all sorts of business challenges. In both cases, a better understanding of AI can help you know their business better and improve your AI investment strategy. 

Check out Forbes’ Top 50 AI companies to watch in 2021 

Looking across industries, AI faces different headwinds to growth. For companies in industries like health care and autonomous vehicles, regulation and public trust are important pieces of the profit puzzle. They can create barriers to growth for even the best of companies, while others in entertainment, finance, or insurance face fewer regulatory roadblocks. Sometimes, the most complex and regulated industries are set for the most disruption and growth, in contrast to lower risk opportunities for more modest growth. 

Don’t forget the bigger picture 

One day, artificial intelligence will become a part of almost everything we do, and now is your chance to get in on the ground floor of the revolution. Regardless of the approach you take, take the time to educate yourself. You’ll be glad you did.



Recent

Month Archives

© Copyright DADMIN CAPITAL LLC. All Rights Reserved