Artificial intelligence (AI) is quickly emerging as one of the most exciting and fast developing areas of the tech sector. Once the preserve of sci-fi movies and theoretical conversations, AI has been steadily becoming more prominent in recent years.
Emerging in a wide range of areas from manufacturing robots used in factories to cleaning robots used in people’s homes and businesses. Social media companies have employed AI in the use of their algorithms while security forces have been exploring the use of AI in CCTV to help predict instances of crime before they happen. Championed by companies such as Tesla, self-driving vehicle technology has become one of the key commercial applications for AI.
Criticisms of AI
While many AI advancements have been heralded as a positive thing, there are plenty of reservations. Recent headlines have highlighted a growing trend of students using online AI to write essays for them, while those in the creative industries worry that AI will be used to replace artists and musicians, at least in corporate settings. Still, regardless of whether you are a fan or not, AI represents a major growth opportunity and as such, is attracting a huge amount of investment. Given that this is still a relatively new sector, lots of traders are wondering how they can get involved and invest in AI. So, let’s take a look at some of the best ways you can gain exposure to AI.
Top way to invest in AI
- Investing in AI stocks
- Investing in AI ETFs
- Investing in the tech sector (indices & ETFs)
Investing in AI stocks
One of the top ways to gain exposure to AI is to invest in companies championing this area of tech. Big names such as Alphabet (Google owner), Tesla, Nvidia and Microsoft (investing heavily in Open AI) stand to gain significantly from the increased commercial uptake and mainstream onboarding of AI.
With many of these companies employing AI in different ways, individual stock investing gives you the chance to do your own research and find the area and application of AI that excites you the most. Whether that be the use of AI algorithms for social media (Meta), the use of AI in search optimisation and distribution of products (Amazon) through self-driving technology and robotics (Tesla), there are several exciting stock opportunities out there for AI enthusiasts.
Investing in AI ETFs
If you’re having a hard time settling on which stocks to pick, however, then one of the best ways to gain exposure to AI as an overall sector is through an ETF. There are several ETF’s now which track a variety of different AI companies. Perhaps the most well-known is the Global X Robotics & Artificial Intelligence ETF. This ETF holds around 40 different AI names including market leaders such as Nvidia and automatically adjusts allocations to help deliver gains without you having to actively manage your investment.
Investing in the tech sector generally – indexes & ETFs
Given that AI stocks are tech stocks, one further way to gain exposure to AI-related gains is to invest in the tech sector generally. Again, there are options when it comes to following this channel. Buying into an index such as the Nasdaq is one of the best ways to benefit from earnings growth in tech companies. With major AI backers such as Alphabet, Meta and Microsoft driving the Nasdaq, gains in these stocks will help lift the overall index. Similarly, a broader tech ETF such as the XLK Technology Select Sector SPDR Fund which manages portfolio exposure to the tech sector is another great way to benefit from the wider impact that AI related gains can have on the tech sector.
NASDAQ weekly chart
Source: TradingView / FlowBank
The decline in the NASDAQ from late 2021 highs has been framed by a well-defined bear channel. However, the sell-off appears to have stalled along the 11038.11 support level since late 2022 and the price is now starting to test above the channel. The 12058.79 level is now the key resistance level to focus on with a break of this level opening the way for a bigger correction targeting 12953.25 and 13768.74 above.