Many businesses are vying for domination in the artificial intelligence (AI) race. However, I could buy just one FTSE stock that could help me build wealth off the back of all of them!
The stock in question is Baillie Gifford US Growth Trust (LSE: USA). I’m looking for the best ways to offer my portfolio exposure to the potentially lucrative AI revolution.
Here’s why I’m seriously considering buying some shares in this trust for my holdings!
US growth stocks
As the name suggests, Baillie Gifford US Growth Trust is an investment trust focusing on US-listed growth stocks.
My attention was drawn to it due to its multiple positions in some of the best and emerging AI tech stocks across the pond.
To give you a flavour of some of its holdings, these include SpaceX, Amazon, Shopify, Tesla, Meta Platforms, and more. Not a bad line up, if you ask me!
Some of these businesses are at the forefront of cutting edge AI tools, which could revolutionise the way we work, connect, communicate, shop, and lots more.
The shares are up a whopping 43% over a 12-month period from 139p at this time last year, to current levels of 199p.
Notable risks
There are certain risks that could hinder how well the trust performs. A big part of this stock picking. For example, I noted that Baillie Gifford recently sold shares in Mastercard and Alphabet. These are two of the leading businesses in the world in their respective industries.
At first glance, there could be potentially endless AI-related tools to enhance these businesses and performance. Plus, is there a stock that could outdo all those in the trust that Baillie Gifford hasn’t procured yet?
I have to caveat this by saying those picking the stocks for the trust have a good track record, and know what they’re doing, but this is a risk nevertheless.
Next, AI isn’t a brand new type of tech. It’s been around for some time, but seems to have risen in popularity due to tech moving on rapidly in recent years. Investors are still unsure of it. This is probably why the trust has been outperformed by more traditional ETFs like those tracking the S&P 500 index. A lack of progress or investors not understanding what they’re buying could keep returns lower than expected or anticipated.
Enticing valuation and my verdict
I reckon one of the best ways to derive a valuation for Baillie Gifford US Growth Trust is by comparing the current share price to the net asset value (NAV). At present, the share price is trading at a discount of just over 12%. This signals the stock could be a bargain right now.
I’ve been pondering how best to capitalise on the AI revolution. Buying shares in singular obvious leading tech stocks could be one way to go, but with added risk. Some examples of these include Nvidia and Meta Platforms.
However, buying shares in a trust with exposure to many major players might be the way to go for me. The next time I have some spare cash, I’ll snap up some of the shares.
