Categories: Stock Market / Technology
Topics: Alternative Investments / Artificial Intelligence

How to Invest in Artificial Intelligence

AI is the hot new trend both on Wall Street and in tech. 

Just over the past few months, with the explosive popularity of Chat GPT, a lot of words have been written about generative AI technology in general. Some are enthusiastic about the potential it has, along with the efficiency it could help bring about. 

Others are warning about exercising caution with this new technology, saying that, if abused, it could foster rising unemployment and many other societal ills. 

But beyond that, capital is going to do what capital is going to do and try to stake its claim in an emerging market in hopes of big returns. 

And because this technology is so versatile, there are a lot of different ways to invest in artificial intelligence. 

The technology is making inroads, very quickly, in business, creative industries, and the medical industry. That means anyone looking to invest in AI has plenty of options for diversifying their investments. 

So we’re going to take this time to look at artificial intelligence and the hype around it to see just why so much money is being pumped into the sector. 

After that, we’ll look at a small handful of companies. 

What This Technology Is and What It Can Do

Let’s take a look at a few basic terms that will keep coming up.

• Artificial Intelligence - This is the term applied to human intelligence being mimicked by machines. Think about tasks like recognizing images or understanding language and you’ll get the idea. They’re designed to be able to learn over time by processing large amounts of data given to them, learning the patterns, and then making decisions based on what they’ve learned. Voice assistants like Siri and Alexa are considered AI, and the name also applies to the systems that govern things like speech recognition and fraud detection. 
• Generative AI - This is a specific type of artificial intelligence that can create new data that didn’t exist before. It does this by intaking a large amount of data and then using that information to create something new related to what it learned. If you ask a generative AI to create an image of a house with specific features, it will go through millions of images of houses and create what you asked for based on those images it learned from. This is what ChatGPT does. 
• Machine Learning - This is the name applied to the practice of AI learning without being explicitly programmed. The machine will be fed data and told what to look for. Whether it’s speech or image recognition, or object recognition, it works via repetition to recognize the thing it’s been told to look for and then identify. It can do this much more quickly than if it were to be programmed by a person. 

By understanding these terms, you’ll get a fundamental understanding of what this technology is and what it’s capable of. 

And when you understand that, it’s easy to see why countless companies across different sectors are starting to make it part of their business models. 

Let’s take a look at three businesses in three different sectors to see what they’re doing with AI. 

Search

Search is one key area where AI is set to grow immensely over the next few years. It’s a function that is, in many ways, the backbone of the internet. The way it stands now, search is more or less the same for everyone. 

You type in what you want to look for and the search engine of your choice returns a long list of results. But AI could help make that more personalized. 

Think about services like Netflix or Pinterest, which often tailor the experience around what users have looked for in the past. These platforms use machine learning to create search results that are relevant to the user and keep them engaged longer.

One company making strides in using AI for search is Microsoft (NASDAQ: MSFT). 

If you haven’t already heard, Microsoft recently made a $10 billion investment in OpenAI, the company behind ChatGPT. They’re already putting that money to use. With a recent update to the Bing search engine, Microsoft added AI features that go into greater detail, depending on the query. 

To test, I recently presented the question “what can I use for egg substitute?” to Bing.

As you can see, the Bing results, on top of returning sites that contained the search terms, provided blurbs at the top and related answers and information on the side. This is a step much further than your standard, endless list of top websites that rank for the term I looked for. 

This is just scratching the surface of what this technology can do for search, and companies are taking notice. Google (NASDAQ: GOOG), who has long cornered the market for search, is planning to implement something similar in its search engine. This effectively sets off an arms race between two of the world’s biggest tech companies and helps put artificial intelligence investment in the spotlight.

As you well know, competition breeds innovation, and this is set to be one of the biggest areas of competition in AI development. That makes tech giants like Microsoft and Google names to watch when wondering how to invest in artificial intelligence. 

Defense

It isn’t uncommon for cutting-edge technology to be adopted for defense purposes, assuming the defense companies weren’t the ones to develop it in the first place. That’s no different when it comes to artificial intelligence. 

Lockheed Martin (NYSE: LMT), one of the world’s largest defense companies, is no stranger to using cutting-edge technology in its offerings. When it comes to artificial intelligence, one of the company’s biggest offerings is in its Aegis system. This naval combat system uses radar and computers to track and guide weapons toward enemy targets. 

AI’s role in this system involves identifying patterns to better detect, track, and identify threats based on signatures in the data. The sheer volume and complex nature of the data go against the need for it to be processed quickly, making artificial intelligence a crucial part of the mission. In military engagements, battles can be won or lost based on split-second decision making, so commanders want every advantage they can get. It’s why, as development of AI continues and the technology becomes more advanced, you’re likely to see it become more widespread. 

And as conflicts like the war in Ukraine continue to rage, and looming tensions with China persist, it makes sense for investors to look at defense as one of the sectors to consider for investing in artificial intelligence for years to come. 

Real Estate

Real estate is another sector that is integrating AI. In this industry’s case, programs like ChatGPT are being used to write marketing material. So the next time you see a house listing or a marketing email from a realtor, it may have been written by AI. The same goes for social media posts that those realtors will use to promote their listings. 

Listings are one of the most important tools realtors have at their disposal to sell. AI tools, with the right prompts from the user, can come up with the kind of sales copy that can generate interest from a potential buyer. 

Beyond that, software like this can also help realtors write contingencies. These are clauses that buyers include to cover themselves in the home buying process. If the terms of the clause aren’t met, the buyer is able to back out of the deal. These are important parts of the process and something realtors rely on to help their clients get the best deal. 

In essence, realtors can use AI tools as a sort of digital assistant. By leaving listings, marketing, and other aspects of the sales process to AI, realtors can spend more time working with their clients. 

One company leveraging AI for this kind of use is RESAAS Services Inc. (TSXV: RSS) (OTCQB: RSASF). This company offers a technology platform for the real estate industry and has recently integrated ChatGPT into its platform so that its users have that functionality. With AI tools becoming more commonplace, this could end up being a growing trend. 

In other aspects of real estate, AI has been present for a while. You’re probably familiar with Zillow (NASDAQ: Z), the online real estate marketplace. One of its most well-known features is the “Zestimate,” an estimate for a home’s worth based on a range of different points of data. 

This process has been using AI for years to analyze things like recent sales, public records, square footage, and location to approximate just how much a home would be worth. It’s an invaluable tool that has helped Zillow become one of the most well-known names in its sector. As the AI technology behind it becomes more sophisticated, it will be able to cut down the percentage of errors that sometimes occur with Zestimates, making it more valuable to users. 

Artificial intelligence in real estate investing is going to become a hot topic just like it has in many other sectors over the next few years. The examples above are just two instances of companies getting in on the trend, but they’ll be far from the only ones. 

Is Artificial Intelligence a Good Investment? 

All of this talk about investing in artificial intelligence isn’t for nothing. It’s already a huge market, worth around $81.3 billion globally. It’s projected to grow to at least $383 billion by 2030, so you can see why so many are trying to stake their claims. 

Because of how versatile the technology is, there are a lot of different forms that artificial intelligence investing can take. The fact that it’s going to affect so many different kinds of industries also means that investing in the early adopters of AI in those particular sectors could prove to be a big win for investors. 

This is something we here at Daily Profit Cycle are watching closely, because this is only the beginning.

Ryan Stancil
Editor, Daily Profit Cycle