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How to Invest in AI

Learn how to invest in AI and capitalize on this rapidly growing industry.

Artificial intelligence (AI) is quickly becoming a game-changer across industries, transforming everything from healthcare and finance to how we shop, get around and consume entertainment.

Plus, AI is helping tackle big global challenges, like climate change and cybersecurity, giving businesses a competitive edge with smarter insights and efficient operations.

What started as basic tools to mimic human problem-solving skills — like playing chess or checkers — has exploded into a game-changing field that’s set to impact almost every part of our lives.(1) Some estimates project the generative AI market reaching $1.3 trillion by 2032, up from just $40 billion in 2022.(2)

And investors are eager to tap into this rapidly growing industry.

How to invest in AI

For regular investors, gaining portfolio exposure to AI is possible in several ways.

Researching and choosing your own AI stocks is one option. Still, it requires a detailed research, analysis and decision-making process to identify potentially profitable investments, which can be time-consuming.

Thematic investing saves time by presenting curated groups of stocks aligned with major, long-term global trends or themes, such as AI. Thematic investing shows you which stocks are AI-related, regardless of sector or industry, and you can invest accordingly based on your investment objectives and risk tolerance.

Alternatively, managed funds provide a hands-off approach to gaining exposure to AI.

Thematic investing

Investors can use thematic investing to find cheap AI stocks, exchange-traded funds (ETFs) and mutual funds they might normally miss when starting their research from scratch.

Brokers that offer thematic investing do the research to find stocks relevant to each theme — in this case, AI — that span different sectors and industries.

Then, depending on the broker, you can either:

    • Invest directly in the theme as-is, automatically spreading your investment across the stocks that comprise the theme. Or, zero in on the stocks that align with those ideas and customize the holdings and weights to fit your goals.
    • Invest in thematic funds, which may be actively managed ETFs and mutual funds, or index funds.
    • Use themes to uncover investment opportunities and invest in those individual stocks or ETFs.

Thematic investing platforms

Opto is a commission-free thematic investing platform that leverages AI to analyze over 10,000 US-listed stocks and ETFs, categorizing them into over 50 relevant themes, including AI, robotics and more.

This AI-driven classification system enables investors to explore the stocks and ETFs within specific themes, assess their performance and invest with as little as $5.

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Our top pick for thematic investing

Trade commission-free stocks and ETFs, and spot emerging trends through thematic investing.

  • $0 commission stocks and ETFs
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Similarly, Charles Schwab offers over 40 thematic stock lists, each comprising up to 25 research-backed stocks. Customers can invest directly in these themes or customize them to align with their investment strategies.

Additionally, platforms like Fidelity and E*TRADE provide access to thematic ETFs, allowing investors to gain exposure to specific sectors or trends through diversified funds.

Managed funds

Managed funds, including ETFs, mutual funds and index funds, offer a hands-off approach to gaining exposure to AI without selecting individual stocks. They’re professionally structured and often focus on various companies involved in AI development, implementation and innovation.

Funds like the ARK Autonomous Technology & Robotics ETF (ARKQ) focus on companies driving innovation in AI, robotics and autonomous technology. They offer active management, which means you benefit from professional insight, but they have higher expense ratios than passive funds, which can impact returns over time.

On the other hand, passive index funds like the Global X Robotics & Artificial Intelligence ETF (BOTZ) track a specific AI-related index, such as those covering companies involved in AI, machine learning and related tech fields.

Unlike actively managed funds, index funds automatically adjust to match the components of a specific index and don’t rely on active stock picking.

Individual AI stocks

Investing in individual AI stocks is an option for those who want to get hands-on and focus on companies they believe in. When you choose specific AI stocks, you pick which AI businesses, technologies or innovations align most with your investment goals.

But going this route requires time and research.

Here’s how to dive into individual AI stocks and what to look for.

Tech giants leading the AI race

Big players like Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN) and Nvidia (NVDA) are at the forefront of AI. These companies are integrating AI into everything from cloud services to consumer products, and investing in these well-established names is a way to tap into AI without the wild swings of smaller startups.

      • Microsoft. They’ve invested heavily in AI, partnering with companies like OpenAI and weaving AI into tools like Azure and Office 365.(3),(4),(5)
      • Alphabet. Google is a pioneer in AI, applying it across their platforms, from search algorithms to autonomous driving with Waymo.(6)
      • Nvidia. If you’re interested in the hardware side, Nvidia is the go-to for graphics processing units (GPUs), which are essential for running complex AI computations. They’re a big name in AI infrastructure.

Pure-play AI companies

Smaller companies solely focused on AI, such as C3.ai (AI), UiPath (PATH) and Veritone (VERI), are considered “pure-play” stocks. These companies may have higher growth potential, but they’re usually more volatile than big tech companies, so they can be a bit of a roller coaster.

      • C3.ai. They focus on creating AI software for businesses to streamline operations, making them popular in enterprise AI solutions.(7)
      • UiPath. Known for robotic process automation (RPA), UiPath helps companies automate repetitive tasks.(8)
      • Veritone. Specializes in enterprise AI software, applications and services for media and entertainment, public sector, talent acquisition and other industries.(9)

Companies powering AI with hardware

If you’re interested in what drives AI tech behind the scenes, look at companies like Intel (INTC) and Advanced Micro Devices (AMD). They supply the processors and infrastructure essential for AI to run smoothly, exposing you to the hardware backbone of AI.

      • Intel. They’ve invested in AI from a hardware and software perspective, focusing on data centers, edge computing and more.(10)
      • AMD. Known for its high-performance central processing units (CPUs) and GPUs, AMD is quickly carving out a space in the AI hardware market.(11)

Tips for choosing the right AI stocks

      • Look at the company’s AI vision. Start by checking each company’s approach to AI. A clear AI vision can indicate how invested a company is in this technology and whether it aligns with where you see AI heading.
      • Check the financials. AI companies, especially newer ones, often reinvest heavily in research and development (R&D), which can make earnings unpredictable. It’s worth looking at their revenue growth, profit margins and how they’re managing their balance sheets. For stability, established tech giants might offer steadier returns, while smaller companies could be high-risk, high-reward.
      • Understand their place in the market. Think about a company’s unique role in AI. For instance, Nvidia dominates AI hardware with its GPUs, while UiPath is a big name in automation. Knowing what makes a company stand out can help you judge its potential to hold or grow its market position.
      • Follow AI adoption trends. AI is transforming industries like healthcare, finance and manufacturing faster than others.(12) Knowing which sectors a company services can give you an idea of its growth potential. Businesses focusing on high-demand areas like cloud AI or process automation might have more immediate upside.

Venture capital and private equity

For investors looking to get in on the ground floor of promising AI startups, venture capital (VC) and private equity (PE) offer a unique way to tap into high-growth potential companies before they go public.

Unlike traditional stock investments, venture capital and private equity involve investing directly in private companies, often in the early stages of development.

This approach requires a higher risk tolerance but can lead to significant rewards if the startups succeed in the rapidly evolving AI space.

For regular investors, platforms like SoFi Invest® and Fundrise offer access to interval funds and tender-offer funds — types of closed-end funds — providing exposure to private and public AI companies.

Examples of VC and PE platforms

      • SoFi Invest. SoFi Invest offers a unique way to gain exposure to AI through VC opportunities. Notably, SoFi offers access to the ARK Venture Fund (ARKVX), an actively managed closed-end interval fund focused on disruptive innovation. This fund invests in both private and public companies engaged in cutting-edge areas, such as neural networks and adaptive robotics, all with a $500 minimum investment.
      • Fundrise. The Fundrise Innovation Fund offers exposure to high-growth private technology companies, including those specializing in AI and machine learning. Notable investments include Databricks, Anthropic and Anyscale, and its minimum investment stands at just $10.

Benefits and risks of investing in AI

Investing in AI offers exciting opportunities but also comes with specific challenges you should consider.

Benefits of investing in AI

      • High growth potential. AI technology is rapidly advancing, creating opportunities for high returns as AI adoption increases across industries.
      • Diversification. AI spans various sectors, from healthcare to finance, providing diverse exposure within a single investment theme.
      • Innovation-driven. Companies that leverage AI can gain efficiencies and insights, potentially increasing profitability and market share.
      • Global impact. AI solutions are increasingly addressing global challenges, such as climate change and cybersecurity, making them attractive to socially responsible investors.

Risks and considerations of investing in AI

      • Market volatility. AI stocks can be volatile, especially as the industry undergoes rapid change and technological advancements.
      • High valuations. Some AI companies are highly valued, which can mean paying a premium for growth that may not materialize as expected.
      • Technological uncertainty. Not all AI technologies will succeed, and it can be challenging to predict which innovations will lead the market.
      • Industry competition. The AI sector is highly competitive, with new startups and tech giants constantly vying for market dominance, which could impact profitability.

Getting started: Steps to invest in AI

      • Define your goals and risk tolerance. Decide on long-term versus short-term AI investment goals.
      • Choose your investment method. Select among individual stocks, managed funds or thematic investing based on your experience level.
      • Open an account with a suitable broker. Select a broker that offers AI investment options or thematic investing.
      • Monitor industry trends. Stay informed on AI developments, news and regulatory changes.
      • Review and adjust your portfolio regularly. Keep track of AI investments and rebalance based on goals and market conditions.
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To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.
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Written by

Editor, Investments

Matt Miczulski is an investments editor at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions. Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio

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