Income Artist

AI Stock: Investment Tips To Succeed

Author: Jimmy Barron
Published:October 22, 2022
3 mins 51 secs

Artificial intelligence is quickly becoming better all the time. Companies like Google, IBM and Datarobot are pioneering research into AI and it’s quickly becoming more applicable than ever before. From robots, auto systems and computing, artificial intelligence has for long been a buzzword that you just can’t escape.

However, if you believed in it enough to invest in AI stock, how would you go about it? There are different ways to approach investing in artificial intelligence along with a myriad of companies to research and investigate.

AI can make for a great option when considering how to balance a portfolio. Here are some tips to get started.

What Is AI?

Everyone knows what AI is…but what defines an investment as an AI investment? Quite simply, it’s human intelligence exhibited by machines. So, logically, if a company or business is trying to create something that can exhibit human intelligence, then it’s an AI company.

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There is a key difference between AI and machine learning. Machine learning (like a machine learning how to play chess) is reacting to data that’s fed into it. Whereas AI expresses data all on its own. 

Soon, we’ll see AI have a huge part to play in the automotive, healthcare, retail, finance and manufacturing industries. In some cases, AI is already a big player.

Tesla uses a mixture of AI and machine learning in its driverless technology which is quickly becoming the industry standard. The longer Tesla’s are driven and used, the better they get at driving and anticipating danger. 

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Check A Businesses Prospects First

What kind of AI are they working on and how applicable will it be? For example if you have a business looking at a small aspect of AI that will only apply to a small section of people, the chances are the scope isn’t wide enough for long term growth.

Whereas a business like datarobot is looking to scale AI and maximize business value. Naturally, if it’s applicable to multiple business types and it works, it’s going to take off.

At the moment datarobot stock is only purchasable on a private basis as they haven’t yet had an IPO. Maybe they will in the future, but private stock can always help balance a portfolio.

It’s not just about looking at whether a business is or isn’t successful in their field..it’s about looking at that future potential and assessing whether their AI is going to be usable on a large scale. Not easy, but once you get the hang of it you’ll be able to assess AI providers and stock quite fast.

Check Out An AI Fund

AI funds essentially involve you putting money into a fund, which then invests in multiple AI stocks. They’re great for people who don’t have the time or inclination to pick individual stocks.

There are a few different funds out there but it depends where you’re located and what your investment firms and banks offer. Some offer AI investments as part of a wider tech stocks, others might offer even broader investments.

Investopedia have highlighted certain AI funds to invest in on their website that include funds like the artificial intelligence and robotics etf or the ROBO global robotics etc. 

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A fund can prove a popular way to invest in AI, however unfortunately it’s a method that leaves you without direct control because you don’t pick or get a say in the stocks the fund invests in.

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Back An AI Startup

You’ve probably heard of angel investing, with businesses like Y combinator pumping millions into startups with good potential. You can do the same, directly. If you really like a smaller AI business and what they stand for, there’s nothing wrong with you investing in them directly.

You need to make sure it’s all above board, with the right contracts and proper notaries. Afterwhich, you’ll own a portion of the AI company on a percentage based ratio. Startups can be fickle, a lot of them fail. As much as 50% of new businesses fail in their first five years in the USA. 

As much as backing a startup will be a brilliant adventure and a lot of fun, it can also be incredibly risky so make sure you do your due diligence in the company before you give them any of your hard earned cash. Also, you’ll have to put a lot of time in here…if you don’t have time, buy stock or pump money into a fund instead.