Artificial intelligence (AI) is a hot investment theme right now and it’s easy to see why. Thanks to ChatGPT, AI is having its ‘iPhone moment’, where we’re all realising that the technology is going to have a massive impact on our lives.
Now investing in ChatGPT directly isn’t possible at present, as it’s owned by OpenAI, which isn’t publicly traded. However, there are plenty of stocks that offer exposure to the technology. With that in mind, here’s how I’m investing in the ChatGPT-led AI revolution.
Powering AI technology
My number one play for AI exposure is Nvidia (NASDAQ: NVDA). It develops high-powered computing hardware designed to speed up computer processing times.
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AI requires an enormous amount of computing power to function. And today, nearly all of the big players in the industry (including OpenAI) use Nvidia products to power their applications. So the company really is at the heart of the AI revolution.
The downside to Nvidia is that it’s a really volatile stock. Last year, it fell around 50%. This year, it’s up around 100%. I’m comfortable with this kind of volatility as I’m in it for the long term. However, it isn’t going to suit everyone.
I’ll point out that, given its huge run this year, I wouldn’t buy Nvidia stock today. Currently, the valuation is very high.
I expect it to have a pullback at some stage though. I will then look to top up my position.
ChatGPT investments
Another core AI holding for me is tech giant Microsoft (NASDAQ: MSFT). It offers a comprehensive AI platform that includes powerful tools and services for developers. It’s also a part-owner of ChatGPT as it’s invested more than $10bn in the technology.
Microsoft is benefitting from its investments in ChatGPT as it has been able to incorporate the technology into its own search platform, Bing. This is leading to increased use of the platform.
Some analysts believe Bing could potentially capture significant market share from Google, thanks to its powerful new features. However, it’s hard to know if this will happen.
This is another stock that’s had a big run this year. Year to date, it’s up around 30%. I plan to add to my position at some point, but I’ll wait for a pullback before doing so.
An AI powerhouse
Finally, we have Alphabet (NASDAQ: GOOG). It’s the owner of Google.
Alphabet has made dozens of AI-related acquisitions over the last few decades (including the UK’s DeepMind). As a result, it’s one of the biggest players in the AI space today.
Some investors believe Alphabet is losing the AI race to ChatGPT. However, I think it’s early days here.
Recently, Alphabet has released its own AI-powered chat platform, Bard. This is now available in over 180 countries and territories.
And this week, the company told investors it’s adding powerful new AI features to its search product to turn complex queries into simple answers by combining results from multiple sources.
Now this is an AI stock I would be happy to buy today. Currently, it’s well off its highs, and the valuation looks quite attractive to me.
If I didn’t already have a huge position here, I would be investing in the company now.
