Artificial Intelligence (AI) is all the rage right now and is everywhere, including the stock market. Nvidia and C3.aiFor example, both companies have AI-centric businesses that are up nearly 200% this year so far.
It’s hard to know how much of this is hype and how much is the result of a wide range of possibilities. One thing that is clear is that they both trade at high valuations. Nvidia stock is trading at 213 times its last 12-month earnings and 40 times its last 12-month sales, while C3.ai is trading at 14 times its last 12-month sales. , no profit.
It’s tempting to jump on the AI bandwagon, or whatever band is creating the latest buzz, because prices are skyrocketing and people around you say AI is going to be the next big thing. But if he’s one of the many people who don’t quite understand what his Nvidia does or how Nvidia’s GPUs work, better avoid Good. Believe it or not, winners can be found in every industry that can ultimately offer the same long-term potential as the hot tech stocks headlined today. You can also benefit from AI trends by finding great stocks that you know and understand that are using AI technology to enhance their game.
Would you like to ride the AI train?
Investing in companies you don’t understand well is never a good idea. Because if you don’t understand what the company does, you can’t assess whether it’s a good investment. Today, there are so many resources for both novice and experienced investors that investors who can perform their own due diligence can make investment decisions without paying high fees to investment planners and advisors. You can succeed (although sometimes it does). that too). Gone are the days when you had to trust whatever a broker recommended without knowing what the company was doing or why it was a good investment.
If you’re interested in microchips and technology, or are willing to put in the time and effort to really learn about tech and AI companies, go for it. For the average investor who doesn’t have that kind of time or thinks they can’t rationalize enough to appreciate the possibilities, something else they can buy with more confidence We guarantee that you can find
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You can also benefit from AI by buying stock in companies you understand. A new era of generative AI is now attracting a great deal of attention. But many of the companies that make the services you use and the products you consume have been using AI for decades.
One of the best examples is Amazon (AMZN 1.92%). If you’re a satisfied Prime customer or have ordered from Amazon in the past, see how Amazon offers more selection and faster shipping than any other company in the US. I have seen it firsthand. Amazon uses AI to reduce delivery times and provide customers with faster shipping. A targeted shopping experience.
The company also develops generative AI solutions for Amazon Web Services, which you can benefit from when buying Amazon for your e-commerce business.
Image Source: Getty Images.
Another example is a coffee giant Starbucks (SBUX 0.39%). Local Starbucks Coffee If he frequents the shop and enjoys the experience, that’s already reason to consider it as an investment. You may not know that Starbucks is investing heavily in AI to predict popular drinks and deliver customized digital experiences on its app.
Amazon and Starbucks have also beaten the market over time. While you may have hot growth and tech positions in your portfolio, more often than not it’s the companies you know and love that offer your best opportunity to make money.
John McKee, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Jennifer Cybill has no positions in any of the mentioned stocks. The Motley Fool has positions at and recommends Amazon.com, Nvidia, and Starbucks. The Motley Fool recommends his C3.ai. The Motley Fool has a disclosure policy.
