Despite being around since the mid-1950s, artificial intelligence (AI) long used to be thought of as something science fiction writers would obsess about but which would have few commercial applications in reality. How times have changed! AI is now used by the banking sector to identify bank theft and fraud as well to help with nearly every internet search that is made these days. In the entertainment sector, such as Netflix and online casinos, AI can offer a personalised product or service that is tailored to meet the client’s expectations based on factors like location and purchasing history. It has been studied closely by the military where it is already used in certain settings. In healthcare, the possibilities of AI are only just being thought about.
As such, investment in AI has started to take off. However, many people of a certain age will remember the so-called ‘dot.com bubble’ when the market last over-inflated itself on the promise of a new technological era. Can we really be sure that the future of AI is not being overhyped? Well, the smart money certainly doesn’t seem to think so. Read on to find out more about the potential growth from the companies at the forefront of AI technologies and some of the investment opportunities you might want to consider.
What Is the Growth Forecast for AI?
There has been a reasonable amount of work done into the AI sector in recent times so you don’t have to rely on data sources which might have a vested interest in the market to find out information. According to independent reports made by Forrester Research and others, growth in cognitive computing technology as it tends to be known will rise rapidly throughout 2019 and 2020. In fact, some estimate that the rate of growth in the sector will average at around 3.5 per cent per annum globally. By the end of 2020, it is expected that you could value the global value of AI at $1.2 trillion.
Other research organisations place the sector on a similar upward trajectory. For example, Tractica Research has said the sector will continue to see continued healthy growth around the world until 2025 at least. Much of the growth potential eyed by these research companies comes down to where they see AI will be used in the near future, such as in contractual analysis and patient care. However, the sky really is the limit because some applications for AI that will come about within the next decade or so simply have not been thought of yet. Therefore, even on the most cautious of analysis, AI looks set to become one of the most important commercial technologies of the future. There can be little wonder, then, that the stock prices of those tech companies most heavily invested in the future of AI often have the most attractive growth rates.
Is it a Good Time to Buy AI Shares?
In a word, yes. The best time to invest in anything is just before its full growth potential takes off. Yes, tech companies which are putting their resources into AI have been doing so for some time. However, it is only now that some of their challenges are being overcome. The rise in share prices we see today may soon look relatively modest so getting on board sooner rather than later is advisable. Of course, you could easily say the same thing of any potential yield in an investment. However, when it comes to AI, the figures speak for themselves. Indeed, there are a range of investment opportunities you could turn to in order to get in on the AI action. Some established tech companies with plenty of diversification in other markets will offer a more cautious investor a stable opportunity with lower risk. Those who want to take a bit more of a punt will also find that there are some up-and-coming AI companies that offer huge potential, albeit with a greater exposure to risk.
What Companies Might Be Worth Investing In?
Let’s look at the two investment models you might be interested in. For shareholders who prefer a lower risk to reward ratio, then businesses like Alphabet – the parent company of Google, which has many AI subsidiaries – is worth considering. It trades on the NASDAQ exchange and currently has shares valued at around $1,120. The tech giant and online retailer Amazon has been developing AI to improve its service offering. It also trades on the NASDAQ and has shares valued close to its peak price at $1,640. Then there’s IBM which trades on the New York Stock Exchange. It has shares valued at a healthy $140. Another two established players are Microsoft and NVIDIA which both have shares traded on NASDAQ. The former has shares valued at around $110, while the latter currently trades at around the $160 mark.
If you are looking for less well-known companies which offer a sound investment in AI, then how about Twilio or Baidu? Twilio is a San Francisco-based tech company that trades on the NYSE at around $118 per share. Baidu is a Chinese company that is listed on the NASDAQ exchange. A share in it would set you back around $160 today. Another company that may not yet be a household name in AI is YEXT. It trades on the NYSE at just over $18 per share. Others worth looking into include Delphi Automotive, part of Aptiv PLC, and Intel, currently best known as a microchip manufacturer rather than an AI developer.