Is it the inevitable wave of the future, or too competitive to risk capital? Here’s what investors should know about the benefits and risks of investing in artificial intelligence.
Artificial intelligence (AI) is a term broadly applied to machines programmed to think like humans. This simulation of human intelligence typically requires three components: perception, reasoning and learning.
AI is becoming increasingly prevalent in today’s technology-infused world. In fact, many of us encounter artificial intelligence daily. This type of technology is applied in countless ways, but we most frequently interact with AI through smartphone virtual assistants, chatbots, cybersecurity, smart home devices and semiautonomous vehicles.
Like most subcategories in the tech sector, artificial intelligence is on the rise. And as big names in the industry like Amazon, Microsoft and Google continue to beef up their AI programs, so too do the newer players in this space, like Catasys and Sonos.
The increasing prevalence of artificial intelligence suggests this industry will only continue to grow as we become more accustomed to the many benefits this technology offers. AI’s various applications across healthcare, finance, travel and more help cement its status as one of the biggest industries to watch in the coming years. In fact, Statista suggests that global revenue from the AI software market will grow to be worth USD $126 billion by 2025 — a market worth USD $14.69 billion in 2019.
And the good news is that there’s money in this type of technology. Don’t believe it? Simply ask Facebook, Tesla or any number of other blue-chip giants with a robust AI department at their disposal.
Beyond potential dividends, you also have the opportunity to support companies producing technology you may actually use or benefit from in the future. And there’s no denying it — advancements in the world of AI are just plain exciting. Who doesn’t want the opportunity to brag about supporting the next up-and-coming self-driving taxi fleet?
Few companies exclusively specialize in AI technology. But there are many companies in the tech industry with robust AI programs on deck.International Business Machines Corporation (IBM)
The following ETFs track companies in the tech sector with well-developed AI programs:
The single biggest threat to companies in this category is competition. High growth sectors are developing fast, and also tend to experience the highest rates of competition. There are countless companies vying to turn a profit with AI technology and this type of competition can be dangerous for investors.
Many of the smaller and more affordable companies available to invest in simply don’t make it, and the already-established names in AI are expensive to invest in. You may get in on the ground floor of something with strong potential only to find the company run out of business by fast-moving competitors six months down the line.
Another big threat to AI stocks is governmental regulation. Tech companies aren’t immune to regulatory disputes and as data and privacy protection measures tighten, some companies may be forced to reconfigure and adapt — and such steps can be time-consuming and expensive.
Artificial intelligence is exciting but can’t develop while unregulated. Governmental and corporate discussions around consumer data protection continue to evolve and investors with AI interests will need to stay alert.
To invest in stocks or ETFs, you’ll need a brokerage account. Explore your platform options below. Check out our guide on how to buy stocks in a company for tips on how to get started.
To make comparing even easier we came up with the Finder Score. Trading costs, account fees and features across 10+ stock trading platforms and apps are all weighted and scaled to produce a score out of 10. The higher the score, the better the platform—it's that simple.
There’s plenty of potential in artificial intelligence but fierce competition and governmental regulation may put a damper on stock growth for big names and up-and-comers alike.
Before you invest, review your platform options with multiple providers to find the account that best meets your needs.
Find out how long term investments work and how to use long term investments to build your wealth.
Read more…
An investment platform that enables users to buy and sell stocks in fine art securities.
Read more…
How to invest for retirement: 8 ways to safeguard your portfolio.
Read more…
Tips for beginning investors and high net-worth individuals alike.
Read more…
Find out which companies hold Bitcoin, why they’re doing it, and what it means for markets, investors and balance sheets.
These are the companies quietly adding XRP to their balance sheets.
We break down which companies hold Ethereum, why they’re doing it and what ETH treasuries mean for markets and investors.
Find out which companies hold Solana, why they’re doing it, and what it means for markets, investors and balance sheets.
Learn how to buy KLAR stock, with historical pricing before you buy.
These are the best renewable energy stocks to buy now in Canada.
Your step-by-step guide on how to invest in FTSE 100 stocks and ETFs.
Tech stocks weigh heavily on the Nasdaq. Here’s how market conditions are impacting the exchange, plus how to invest in the Nasdaq.
Your guide to investing in the Dow Jones, choosing stocks and comparing Dow Jones ETFs in Canada.
Your guide to short selling, how it works, and the pros and cons to watch out for.