New (and better) artificial intelligence (AI) hits the market each year. Yet, we’re still likely early in artificial intelligence technology. So, imagine what will be available 20 years from now! If you, too, imagine an explosion of AI technology in the future, you may want to invest. We have some suggestions if you’re asking yourself which AI stocks make sense in 2023.
Why Directly Buying AI Stock Is Difficult
As impressive as AI is, we’re in the infancy of this technology. As a result, “‘It can be difficult to get exposure to pure-play AI companies because this is a relatively new technology,’ says John Cunnison, vice president and chief investment officer of Baker Boyer Bank. ‘Most new, innovative AI companies are small and funded by private capital and are not publicly traded’” (U.S. News & World Report).
What AI Stocks Make Sense to Buy Now
Since investing directly in an AI company is challenging, you have two other options.
Invest in Companies That Benefit from AI
Microsoft (MSFT)
Microsoft is utilizing AI in many applications, from healthcare to Bing’s search engine. In addition, “Microsoft has gotten a lot of buzz. . .thanks to its partnership with OpenAI. Microsoft. . .recently put. . .$10 billion in OpenAI following the launch of ChatGPT. Microsoft unveiled a new version of its Bing search engine, powered by ChatGPT, and the company is racing to incorporate GPT features across its product portfolio, including its Azure cloud infrastructure service, Edge web browser, Office productivity software suite, and Bing” (The Motley Fool).
Amazon (AMZN)
Amazon uses AI in every aspect of its business. AI suggests recommendations to Amazon users based on previous choices. Amzon uses AI to help determine delivery driving routes and to power Amazon’s Alexa. If you want to invest in a company that uses AI extensively, Amazon is your best bet.
Invest in an AI Centered Exchange Traded Fund (EFT)
These two EFTs are good choices:
Global X Artificial Intelligence & Technology ETF (AIQ)
Trading as AIQ, this ETF includes household name companies that benefit from, and will likely continue to benefit from, AI. The companies include Meta Platforms Inc. (META), Nvidia Corp (NVDA), Tesla Inc. (TSLA), and Apple Inc. (AAPL).
Another benefit of this ETF is that these companies are well-known and well-established, so investing here has less risk for cautious investors.
iShares Exponential Technologies ETF (XT)
If you’re less interested in investing in Big Tech, you can “buy XT, which currently holds 197 global tech companies tracked by the Morningstar Exponential Technologies Index. The ETF tracks nine themes, with notable ones like cloud computing, robotics, and big data analytics that are expected to benefit from advancements in AI” (U.S. News & World Report).
Final Thoughts
Which AI stocks make sense in 2023? These four are excellent choices to start investing in AI. First, however, conduct your own research as there are many more ETFs to choose from and companies that use AI heavily.
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