How to Invest in AI – Forbes Advisors Australia

Just because Microsoft, Nvidia, and C3.ai were big winners this year doesn’t mean they’re necessarily the best stock investments right now.

First, the price of AI stock has skyrocketed, making its valuation unattractive. A basket of AI stocks compiled by JP Morgan Securities has risen 42% for the year as of July 10 compared to the S&P 500, which represents the overall US stock market. The broader technology sector is up 25% compared to the benchmark index.

Another reason to be cautious is that AI stocks may pause to digest the gains. “In the short term, AI companies may outperform the market as a whole,” Robbins said.

Finally, successful AI stocks are not necessarily future winners. Two of the three AI stocks listed above are mega-cap companies. But history shows that small, agile growth stocks are more likely to introduce and profit from innovative new products and services.

Buy AI Exchange Traded Funds

Investing money in AI-themed ETFs is a less risky alternative to owning AI stocks.

Leading ETF fund families are adding to existing products or launching new funds to capitalize on the surging demand for AI investments. To date in 2023, US inflows to AI ETFs have increased by more than 70%, compared to a 2% increase for US Listed Equity ETFs overall.

According to ETF.com, there are 17 ETFs in the US that are at least primarily focused on AI or its analogues, machine learning. They own shares in companies that make products such as computer chips for the AI ​​industry or use AI in their own businesses.

ETFs are growing in popularity in Australia. In fact, according to ASX research, the number of people investing in ETFs has grown by more than 30% over the past three years, and now one in five of his investors has more than one. owns shares in ETFs. Australia doesn’t have his ETFs that invest directly in AI, but he does have his ETFs that focus on exposure to the technology that underpins artificial intelligence. Here are some of his ASX AI-themed ETFs that investors might want to explore.

• BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ). RBTZ focuses on the top companies expected to benefit from increased adoption of robotics and AI, especially those investing in self-driving cars and drones, industrial robots and automation, non-industrial robots, and of course AI itself. Provides exposure.
• Global X ROBO Global Robotics & Automation ETF (ROBO). Issued by Global X Management, ROBO is characterized by wide exposure in various markets including Asia and Europe. Like RBTZ, this fund will invest in companies that could benefit from the growing adoption of robotics and AI, including both industrial and non-industrial robots.
• BetaShares S&P/ASX Australian Technology ETF (ATEC). The ETF aims to track the performance of the S&P/ASX All Technology Index and provide exposure to leading ASX-listed technology companies covering sectors such as consumer electronics, online retail and medical technology. .