Artificial Intelligence (AI) has been a game-changer in many industries, and the world of investing is no exception. The use of AI in investing has been on the rise, with many investors and financial institutions leveraging AI technologies to make more informed decisions. In this article, we’ll explore how AI is being used for investing, the best AI investments, the top AI shares to buy, and the AI stocks to watch. And this is some of what the most legendary investors of today are saying about AI and its invesment potential:
Ray Dalio, founder of Bridgewater Associates: “AI is going to be one of the most important investment themes of the next decade. Companies that are able to leverage AI effectively will have a significant competitive advantage.”
Marc Andreessen, co-founder of Andreessen Horowitz: “AI is going to change everything. It’s going to change the way we live, the way we work, and the way we invest. Investors who don’t understand AI are going to be left behind.”
Peter Thiel, co-founder of PayPal: “AI is the mother of all technology investment themes. It’s going to be the biggest thing since the internet.”
Jim Simons, founder of Renaissance Technologies: “AI is the most important technology of our time, and it will have a profound impact on the way we live and work. Investors who don’t understand AI are going to be left behind.”
Using AI for Investing
AI is revolutionizing the investment landscape. It can analyze vast amounts of data at an incredible speed, far beyond human capabilities. This ability allows it to identify patterns and trends that might be missed by human analysts. AI can analyze market trends, economic indicators, and company financials to provide investment recommendations. AI will drive efficiency and productivity – which means companies can do more with less – and therefore those that embed AI into their operations, will become more profitable and successful.
Moreover, AI can also help in risk management. It can predict potential market downturns based on historical data and current market conditions, enabling investors to adjust their investment strategies accordingly. One of the latest trends in AI and investing is the use of robo-advisors. These are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. These have been trialled globally (including locally by firms like Sygnia) with limited success. For the most part it seems, people still like talking to a real person somewhere along their decision-making journey. But as the technology improves, this may change. ChatGPT has started to show us this.
Best AI Investments
Investing in AI has become increasingly popular as more businesses across various sectors are integrating AI technologies into their operations. Here are some of the best AI investments to consider in 2023:
1. Natural language processing (NLP): NLP is the ability of machines to understand and interpret human language. This technology is already being used in a variety of applications. For instance, customer service chatbots like those used by banks and e-commerce platforms use NLP to understand customer queries and provide appropriate responses. Machine translation services like Google Translate also use NLP to convert text from one language to another. OpenAI and ChatGPT is in the early stages of showing us what’s possible with this technology.
2. Computer vision: Computer vision is the ability of machines to see and understand the world around them. This technology is already being used in a variety of applications. For example, self-driving cars like those developed by Waymo, a subsidiary of Alphabet, use computer vision to navigate roads and avoid obstacles. In the healthcare sector, computer vision is used in medical image analysis to detect diseases such as cancer in early stages.
3. Machine learning (ML): ML is a type of artificial intelligence that allows machines to learn from data and improve their performance over time. This technology is already being used in a variety of applications. For example, Netflix uses ML algorithms to analyze viewing patterns and recommend shows and movies to its users. In the financial sector, credit card companies use ML to detect fraudulent transactions.
4. Robotics: Robotics is the field of engineering that deals with the design, construction, operation, and application of robots. Robots are already being used in a variety of applications. In the manufacturing sector, companies like Tesla use robots for assembling cars. In the healthcare sector, robots are used for tasks ranging from dispensing medication in hospitals to assisting in complex surgeries. Intuitive Surgical (ISRG) is a great example of this with their da Vinci surgical system which uses robotic technology to enable complex surgery in a minimally invasive way.
Best AI Shares to Buy 2023
1. Alphabet Inc. (GOOGL): Alphabet, the parent company of Google, is a leader in AI. Google’s AI capabilities are evident in its search algorithms, digital advertising technologies, and services like Google Assistant. Alphabet also owns DeepMind, a pioneering AI company. Its huge data and ability to use AI to train this data on, makes it compelling, even if it faces threats to its traditional search business.
2. Microsoft Corporation (MSFT): Microsoft has made significant strides in AI and cloud computing. Its AI capabilities are integrated into products like Azure, Office 365, and Dynamics 365. Microsoft also invests heavily in AI research and development and probably offers the ‘safest’ way to participate in the AI revolution. And we all know of its investment in ChatGPT as it takes aim at Google’s domination of the search business, amongst other things.
3. NVIDIA Corporation (NVDA): NVIDIA is known for its graphics processing units (GPUs), but it’s also a significant player in AI. NVIDIA’s chips are used in data centers, autonomous vehicles, and robotics, all of which are AI-intensive applications. The chip or semi-conductor sector more broadly is a great way to play this theme, but Nvidia is certainly the poster child. We discussed Nvidia in our stocks to buy now piece at the start of the year. It’s grown over 200% in value since.
4. Oracle: Oracle has been investing heavily in artificial intelligence (AI) in recent years, and it is seen as a potential leader in the AI market via its cloud software as a service offering that can build various AI applications. For those value focused investors who cannot stomach expensive names like Nvidia, this is one name to consider.
5. Salesforce.com, Inc. (CRM): Salesforce uses AI to enhance its customer relationship management services. Its AI-powered Einstein platform offers a range of services, including sales forecasting and customer service automation.
All of these are established names – with the real winners probably still unkown as we look out over the next decade as to what will be the best AI shares to buy. But some of these names should certainly form the cornerstone of a portfolio as this area matures.
Clearly investing in companies that have been at the heart of the technology and digital transformation over the last 10 years, has in many cases generated transformational returns. These listed are simply a small sample. And all these companies, along with many others, will embed AI into more of what they do. But investing in AI will be about more than just investing in technology companies. It will be about finding the leaders across all sectors and industries than use AI to become better at what they do.
AI Stocks to Watch
Some of the AI Stocks to Watch include established names and a few you may not have heard of. They might not necessarily be ‘pure-play’ options but use AI as a key part of their business, which all companies will need to do if they want to survive and thrive over the next 20 years.
1. Tesla Inc. (TSLA): Tesla’s advancements in AI for its self-driving technology make it a stock to watch. The company’s AI-powered Autopilot and Full Self-Driving capabilities are industry-leading and IF it gets that right, it could become a challenger for most valuable company in the world.
2. Alteryx Inc. (AYX): Alteryx, a data science and analytics company, uses AI to help businesses analyze data and make more informed decisions.
3. Splunk Inc. (SPLK): Splunk uses AI and machine learning to analyze big data from various sources.
4. The Trade Desk Inc. (TTD): Trade Desk uses AI to optimize digital advertising campaigns and is becoming a leading player in the cord-cutting trend from cable/satellite TV to streaming.
5. Palantir (PLTR): Palantir is a data analytics company that specializes in big data. Palantir’s software helps businesses to make sense of large amounts of data. It also works closely with the US government to analyze the vast troves of data that can create insights and efficiencies.
There is a huge amount of VC money being poured into AI startups currently, so watching the IPO space and looking for opportunities as they arise could also pay dividends. What could be the next company that goes 100X over the next 20+ years?
Best AI ETFs to Invest In
For those looking to participate in the AI growth trend without investing in individual stocks, ETFs offer a great alternative, which include a couple of names that stand out if you’re a South African investor wanting to invest in Rands.
1. Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ): This ETF seeks to invest in companies that potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence.
2. Sygnia 4th Industrial Revolution Global Equity ETF: This ETF provides exposure to a range of companies leading the way in AI and robotics and despite its volatility has offered domestic investors a great opportunity to invest in this sector over the last 6-7 years.
3. Sygnia FAANG Plus Equity Fund: This fund invests in the FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google), all of which are making significant strides in AI. It’s grown over 70% YTD in Rand terms.
Read Next: Our comprehensive guide to offshore investing in 2023 and why it’s so important, particularly if you’re serious about achieving real financial security.
Conclusion
The intersection of AI and investing offers a wealth of opportunities for investors. As AI continues to evolve and permeate various sectors, it’s an area that you should watch closely. Whether you’re considering AI-powered robo-advisors, investing in AI-centric companies, or buying shares in AI-focused ETFs, the potential for growth is significant. However, as with any investment, it’s important to do your own research and consider your financial situation and investment goals. Happy investing!
Please note that this article is for informational purposes only and should not be considered as financial advice. Always do your own research and consult with a financial advisor before making any investment decisions.
Carl-Peter Lehmann
Carl-Peter is a Director and Partner at Henceforward. He has been following and investing in the AI space in his personal capacity since 2017 - and is excited and curious to see how it evolves over the next decade. He likes to talk to his clients about the transformative and potential impact investing in technology and themes like AI can have on their portfolios if they are able to withstand the volatility and have a sufficiently long-term time horizon.
