It feels like overnight, artificial intelligence (AI) and ChatGPT have taken over the world (maybe it’s even coming for my job?). Here’s how to invest in it.
AI is growing fast
The global AI market is expected to be worth over US$300 billion in 2024, but if you think you’ve gotten to the trend too late, consider this – the annual growth of AI from 2024-2030 is estimated to be over 15% per year.
So why is it growing so quickly?
Far from just a tool to help you write your emails, AI is quickly disrupting a whole range of industries and the possible applications are nearly endless. In agriculture, it’s being used to identify pest and disease issues before a human could spot it. In medicine, CSL Ltd (ASX: CSL) is using it to help healthcare professionals make faster and more accurate diagnoses. BHP Group Ltd (ASX: BHP), Australia’s largest company, is using AI to make copper extraction more efficient.
AI will touch just about every industry, so it’s worth thinking about how you can invest in it.
One way to invest in AI
There are plenty of ASX-listed companies building AI tools and services. There are companies that use AI directly, like Appen Limited (ASX: APX) or Dubber Corporation Ltd (ASX: DUB).
Others could benefit more indirectly, like NextDC Ltd (ASX: NXT) who develop and operate the large-scale data centres that’ll be needed for AI.
However, picking the winners can be a risky game to play, especially if you don’t know the industry very well (like me). So here’s what I’d do instead.
How I’d do it
Rather than trying to pick the winner, I’d look at an exchange traded fund (ETF) that can give you exposure to lots of AI-related companies with a single purchase.
My concern with AI is that there are so many companies trying to get into the space, and there are bound to be some that don’t work out. An ETF can reduce some of your risk by balancing out these weaker companies with the ones that end up being real winners.
The good news is, there are lots of options on the ASX. You could try the Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ), or the iShares Future Tech Innovators ETF (ASX: ITEK). Maybe the most direct exposure would be the newest AI ETF on the block, the Global X Artificial Intelligence ETF (ASX: GXAI).
A word of warning
One thing to keep in mind with these ETFs is that they tend to be US-heavy, and the companies they invest in can have a lot of overlap with other ETFs you might own like the Betashares Nasdaq 100 ETF (ASX: NDQ).
Before you invest in one of these ETFs, make sure you check your other holdings so you don’t accidentally find yourself over-invested in one country or sector.
If you want to learn more, you can create a free Rask account below to get access to ETF courses or join the Rask community here.
