“Investing in artificial intelligence can be an interesting option for investors seeking exposure to this constantly evolving technology.”
The phrase is from a proprietary AI tool, ChatGPT. The pull of the sector, called to revolutionize the processes and the labor templates, attracts retail investors, who seek to make a profit. Although it has several established giants in the lead, such as Microsoft or Alphabet, the lesser-known names can hide the biggest surprises. All depending on the risk that you want to assimilate.
“Technological development is growing exponentially,” says DarÃo GarcÃa, an analyst at XTB. To take advantage you have to be selective. When consulting experts in which companies to look for, several names are repeated. Some sound like the general public, like Microsoft, with its imprint on ChatGPT and a way to invest in the famous tool, since it is not listed on its own; Alphabet (Google) integrating artificial intelligence into its Chrome search engine; or Amazon, which uses it for voice processing in its Alexa assistant or its cloud. “They have a competitive advantage because of their ability to invest large amounts of resources in RD, have large data sets and talented teams,†says Marc Pañella, fund selector at International Financial Analysts (AFI).
Other listed companies that allow any retailer to become a shareholder are less well known. And they have more horizon. “Smaller and lesser-known startups can present interesting opportunities,†warns Pañella. On the stock market, C3.ai stands out, which accelerates digital transformation and the construction of applications for companies; the AI ​​linked to Upstart Holdings’ finances and loans; Palantir, big data and with large contracts in the US public sector; or Baidu, a Chinese search engine that has been working on virtual assistants and voice recognition for years.
The autonomous delivery cars of Nuro, the cybersecurity of Tanium or the robotic automation of Automation Anywhere, are other prominent firms and called to mark ground, but they are not listed. Private companies in some cases have large technology companies as shareholders or investors.
As in everything, when looking for the benefit you can risk more or choose to be conservative. The most cautious would opt for big technology. Also more by suppliers than developers, such as Nvidia graphics cards and processors, Micron memories or IBM and Intel equipment. They nourish the industry and their advantage is that they have the most diversified business: “They provide the physical technology to program and the power to operate,” says GarcÃa. The most aggressive, who opt for higher returns and volatility, can go for smaller companies focused on the development of AI. Due to their nature, when they emerge “developers require above all an economic sacrifice, a trial and error. In the beginning they will not be profitable. They are more risky but perhaps for the future they are a correct positionâ€, continues GarcÃa.
From the eToro platform they point out that there is great interest in C3.ai globally, although in Spain Upstart Holdings also stands out. Nvidia, Palantir, Intel, SentinelOne –automated cybersecurity– and AMD technology also stand out. It is not a thing for young people, because the greatest growth occurs in investors over 55 years of age, according to their own study. “It is important to take into account that startups can be more risky than an established company and may have a greater potential for failure,†warns Pañella.
In addition to investing in it, artificial intelligence is used to manage portfolios. “AI models can lead to more informed and data-driven decision-making,†says Heloïse Greeff, an artificial intelligence and machine learning specialist at eToro. “It allows you to cover the depth and breadth of analysis that was previously only possible with a large team.†Combined with human judgment, “it can help reduce risk and increase profitable operations between 5% and 8%.” Something necessary since “investment in new technologies entails a higher level of risk”. Without going any further, C3.ai has risen close to 60% since January, but has fallen 85% in a little over two years due to the change in the cycle in the markets and rates. The same Palantir, which gains 20% this year, but is 77% below its maximum. Rebounds or long-term trend?
It is clearer that not all will rise. Just as there will be winners, there will also be losers. Adapting to artificial intelligence is crucial in industries such as motor, retail, finance, mobility or health. Even the biggest can get in trouble.
