Investor interest in artificial intelligence (AI) is rapidly growing, making this field one of the most dynamic investment themes.
Over the past two years, AI has evolved beyond being merely a subject of academic research and laboratory experiments, becoming a critical tool for addressing practical challenges across various industries—from healthcare and finance to logistics and manufacturing.
Companies engaged in AI development are attracting substantial investments, reflecting investor confidence in these technologies’ potential to transform the world while delivering high returns. This trend also fuels the emergence of new startups and intensifies competition among leading market players.
Investors have numerous opportunities to invest in different aspects of the AI ecosystem and infrastructure, ranging from companies developing AI and applied models to those producing the necessary technologies and components.
For example, one of the key segments of the AI ecosystem is companies that manufacture semiconductors. Semiconductors play a critical role in the development of AI, providing the computational power and speed required to process large volumes of data and complex algorithms.
A prominent success story in this area is NVIDIA, a company that develops graphics processors designed to accelerate AI. NVIDIA’s stock price has more than doubled since the beginning of this year (from $48 per share in January to $120–125 in mid-July 2024) and has increased eightfold since the beginning of 2023 (when it was below $15).
A key supplier to NVIDIA is Taiwan’s TSMC, the world’s leading semiconductor manufacturer. TSMC designs and produces high-performance chips used in NVIDIA’s graphics processors.
Further down the supply chain, ASML, a Dutch company, is the world’s leading manufacturer of lithography equipment essential for semiconductor production. Investors can continue to explore and invest in lesser-known companies that supply critical materials, components, or equipment necessary for producing microchips and semiconductors for the aforementioned industry giants.
Currently, chip and semiconductor manufacturers’ stocks experience volatility due to complex relations between China and the USA and the risks of trade sanctions. However, as a key group within the AI technology supply chain, they possess significant long-term growth potential.
Additionally, investors may consider companies involved in the production of specialized AI equipment, including servers, cloud platforms, and data storage systems. Amazon and Google dominate the cloud solutions market, making them significant players in this aspect of AI development.
Another vital link in the AI supply chain is software and algorithm providers. Companies developing platforms for machine learning and data analytics, such as IBM and Microsoft, offer comprehensive solutions that help businesses implement and utilize AI technologies.
Thus, investors can choose various strategies, from investing in key equipment manufacturers to supporting startups creating innovative AI applications, and major tech companies offering cloud and software solutions. This approach allows for portfolio diversification and risk minimization while capitalizing on the growth and development of the AI industry.
This pertains to companies that develop and support the AI infrastructure and ecosystem—the so-called AI enablers. When focusing on companies that derive the most significant benefits from integrating AI into their business practices—known as AI adopters—the healthcare and financial sectors stand out. In medicine and pharmacology, AI is actively used to improve diagnostics, personalize treatment, analyze medical data, and discover new drugs. Financial companies use AI for market analysis, risk assessment, trading automation, and enhancing client services.
At the same time, as noted by renowned experts on AI’s impact on business and the economy, Ajay Agrawal, Joshua Gans, and Avi Goldfarb, companies successfully adopting AI now are not necessarily those that will reap the most significant benefits in the future. Currently, AI solutions improve some existing manufacturing and business practices but do not radically change them. Drawing a parallel to the forty-year gap between the invention of electricity and its widespread use in homes and industry, these experts predict that AI’s revolutionary potential in business is only beginning to unfold, and it will take considerable time before fundamentally new systemic solutions emerge, capable of fully harnessing AI to transform all aspects of human life and society, much like electricity did.
Therefore, it is essential to stay attuned to developments and closely monitor the rapidly evolving and fascinating world of AI technologies.
