Artificial intelligence (AI) seems like it’s unstoppable at the moment. My Stocks and Shares ISA already includes some leading AI investments. The largest of which is US tech giant Nvidia (NASDAQ:NVDA), which I call the “the big daddy of AI”.
After its stellar run over the past year of over 200%, it has swiftly become my largest individual stock investment. But I’m not selling. In fact, I’m looking to add to my position and buy more.
Top pick for my portfolio
Demand for Nvidia’s high performance graphics processing units show no signs of slowing down yet. It’s so far ahead of the competition, I think it could take years for it to be matched. I’d put that down to CEO Jensen Huang’s direction and investment in this space over a decade ago.
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With 35,000 components in its H100 chip, it’s also incredibly complex to replicate.
There are over a trillion dollars-worth of data centres in the world. Many of these will likely shift to accelerated computing and AI over the coming decade. This is a huge market for Nvidia and as the leader in this space, I continue to back it.
Bear in mind that Nvidia’s share price could become quite volatile at some point. It has risen by 165% this year. Semiconductor chips also tend to be cyclical, so any signs of a slower economy could be a risk to its stock price. But it’s not just US tech giants that stand to benefit from the AI transition. Some FTSE 100 shares are well-placed to capitalise on the shift too.
Credit where credit’s due
I reckon Experian (LSE:EXPN) is one of them. This is a Footsie-listed global information services company. It gathers data from thousands of sources, analyses it and creates tools and platforms that help its clients make better decisions.
Experian has been investing in AI to enhance its data analytics, create more personalised products and automate many of its vast data processing tasks.
Over the coming years, many business models are likely to be disrupted by AI. But Experian could prove to be resilient. Its extensive databases and proprietary analytics could make it difficult to replicate.
Of course, changes to data privacy laws or other regulations could affect its business.
Overall though, it offers double-digit return on capital employed and a 24% profit margin. Both metrics indicate a good quality business. And if I had spare cash, I’d add it to my Stocks and Shares ISA today.
Data analytics is cool now
Another UK business with vast proprietary databases is RELX (LSE:REL). It provides analytics and decision tools for professionals. This conglomerate of several businesses operates in various market segments: Risk, Scientific, Technical & Medical, Legal and Exhibitions.
RELX is already building generative AI into its products. If done successfully, it could transform the way its products and tools are used.
End users need to trust the information they’re receiving from AI tools and this is what RELX aims to achieve.
Managing the transition to maximise AI’s potential is likely to come with some challenges too. Parts of the business could face some disruption along the way.
That said, RELX is a well-diversified business. It’s also a profitable company with growing earnings. Overall, I’d consider it a top AI stock for my ISA if I had the cash.
