Two English vowels had gotten a lot of fame these few months. Ever since the Chat GPT phenomenon in late 2022, this domain had gotten the attention from students, technopreneurs, and of course, investors.
So, what are the letters? Chances are that you had already guessed them: AI, or artificial intelligence.
I had written a piece about AI here with regards to Alphabet’s (or Google’s) response to Chat GPT, and true enough, after suffering initial setbacks to their version Bard, they came roaring back.
While AI was nothing new and had been around for decades, the explosion of it beyond just chats and searches is making waves around. The first to be seen was in the arts scene, where there were a lot of AI applications generating graphics and pictures which, for some of them, came across as very real-life. There was even talk about AI replacing some professional jobs, where the practitioners spent years getting the necessary academic qualifications to do them, and this is a nasty bummer to those who may be potentially affected. And now we have had heard of people trying to use AI to carry out their investment decisions.
Short of a Skynet or Matrix scenario happening (which I am very afraid of deep down in my mind), the permeation of AI is happening, or going to happen, now, but for this post I am not going to talk about the societal and ethical dimensions of it. Rather, being an investment-related blog, I am going to offer my views from an investor point of view.
Let me introduce another AI into the fray: associative investing1. This A.I. (using this to distinguish from artificial intelligence) is useful in where and how to invest in AI. AI is just a theme, and there are many things and components that support this, and things that benefit from its downstream. One glaring area would be the big companies that utilises AI themselves, with Alphabet and Microsoft being the obvious examples. Another is the chip industry, and to name one of them: Nvidia, whose CEO had just stated a few hours ago that chip manufacturing is an “ideal application” for AI computing2. And definitely, we have to include self-driving technologies, which AI plays a big role.
Using A.I. is easy; just take an A4-sized paper, draw out mind maps or relationship lines of things that are directly or indirectly related to AI, and you can see where you can further explore the various regions/countries, sectors/industries and companies, and exploit your investment capital.
Exchange Traded Funds
If drawing hubs and spokes is not your cup of tea, there is still the encompassing method of investing into AI as a whole, and that is via exchange traded funds, or ETFs. There are a few such ETFs available in the market, with most of them listed in the United States. Although the ETF providers had cobbled up AI-related counters in their funds, further research on them such as the indices that they follow, the expense ratios, etc., is necessary as to determine which one(s) is suitable for your investment portfolio.
The Bedokian is invested in Alphabet directly, and Microsoft and Nvidia indirectly via a S&P 500 exchange traded fund.
1 – The Bedokian Portfolio (2nd Ed), p137-138.
2 – Caulfield, Brian. Chip Manufacturing ‘Ideal Application’ for AI, NVIDIA CEO Says. Nvidia Blog. 16 May 2023. https://blogs.nvidia.com/blog/2023/05/16/itf-world-2023/ (accessed 16 May 2023).