Artificial intelligence (AI) is a hot topic right now. Since OpenAI launched ‘ChatGPT’ in November, everyone has been talking about the technology. From an investment perspective, AI looks set to generate many opportunities in the years ahead, as it’s going to impact nearly every industry. With that in mind, here’s a look at some AI stocks I’ve bought for my portfolio.
The influence of AI is set to permeate every sector worldwide as its reach continues to accelerate and broaden, creating compelling investment opportunities.
Sanlam Investments
Powering the AI revolution
Let’s start with Nvidia. I see it as one of the best ways to play the theme.
Artificial intelligence requires a huge amount of computer processing power. It’s not really possible to run AI applications efficiently with old-school computer chips.
This is where Nvidia comes in. A designer of graphics processing units (GPUs), it specialises in high-power computer processing hardware designed specifically for AI applications.
Today, nearly all of the major players in the AI space (Google, Meta, OpenAI, etc) use Nvidia hardware to run their applications. According to research firm Omdia, it has an 80%+ market share.
Yet it’s still very early days here. According to Research and Markets, the AI chip market is set to be worth over $300bn by 2030, compared to just $21bn in 2021. So Nvidia looks well-positioned for growth.
It’s worth noting that Nvidia shares are volatile. This is not a stock for risk averse investors. I’m comfortable with the volatility though. I plan to stay invested for the long run.
This is the kind of company that, I think, has the future in a chokehold.
CNBC’s Josh Brown speaking about Nvidia on The Halftime Report
Major players in artificial intelligence
I’ve also invested in tech giants Microsoft and Amazon for their exposure to AI. Microsoft put $1bn into ChatGPT in 2019 and recently invested another $10bn in the technology. And the company already offers a comprehensive AI platform that includes powerful tools and services for developers.
As for Amazon, it was an early adopter of the technology and it can be seen today across the entire organisation. For example, the company uses AI to predict customer demand, operate chatbots, and generate tailored product recommendations.
Of course, we can’t talk about AI stocks and not mention Alphabet, the owner of Google. This is another company I’ve invested in for exposure to the technology.
Alphabet is another leader in the space. And the technology is already integrated into many of its products, including Google Maps, Google Assistant, and YouTube.
In 2021, Alphabet’s AI division, DeepMind, launched a new venture (Isomorphic Labs) that uses the technology for drug development. Isomorphic is trying to build models that can predict how drugs will interact with the body.
Overall, Alphabet looks to have a lot of potential, in my view.
There’s no guarantee these Big Tech stocks will be the winners in the AI space though.
Therefore, for diversified exposure to the theme, I’ve also invested in the Sanlam Global Artificial Intelligence fund. This product – which is higher risk – is focused specifically on companies that are active in the AI industry. I see it as a good way to broaden my exposure to this exciting area of technology.
