3 Ways To Invest In And With Artificial Intelligence (AI)

The Juice believes the hype. In terms of application, investment opportunities and using it to invest, we’re in the early innings of artificial intelligence (AI). 

As usual, follow along as The Juice does what we do best — cover some basics you can apply today and move into more advanced territory you might be able to apply today, but can definitely consider tomorrow. As we make the distinction between investing in AI and with AI. 

Buy The Leaders

The easiest and most obvious way to invest in AI. And probably the only way long-term investors should go about it. At least with a majority of their money and long-term portfolio. 

We like to break it down into three related approaches. 

One, buy the tech leaders we’ve known about for years. For decades. 

The big names in tech, such as the stocks that populate today’s Trackstar top five, tend to be at the forefront of AI. In that, it was on their mind and part of their research and development spending long before AI became a mainstream thing we see mentioned every hour, every single day. 

While we might avoid Intel (INTC) right now, we would go with every other name on the list, plus companies such as Meta Platforms (META) and Alphabet (GOOG). But that’s kind of the point, you buy these stocks based on their current tech prowess and future prospects, as you would with or without AI on the brain. 

Two and three, buy ETFs that don’t call themselves AI ETFs. 

The best AI ETF out there might be the VanEck Semiconductor ETF (SMH). Led by Nvidia (NVDA), it’s loaded with semiconductor names, most of which are at the forefront of powering AI. While SMH tends to pop and drop with NVDA, it’s up about 65% over the last year compared to the whopping 170% worth of upside we have seen in Nvidia. 

Broadening it out, just buy the broad market. We have gone over it before. Many of the top stocks that make up the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) (as well as other broad market ETFs and broad, but sector-specific ETFs such as SMH) are AI stocks. 

Add some other favorites, such as our favorite AI growth stock with a dividend (up 46% YTD!), and there’s no need to reinvent the wheel to invest in AI. 

Use A Robo Advisor

This is about using AI to invest.  

Not long ago, The Juice discussed the ins and outs of robo advisors. 

We also explained how these automated investing services do what they do and defined their utility:  

We like to say that ETFs take the guesswork out of investing. Robo advisors go a step further. They not only put you into ETFs, they select particular funds that make the most sense for you, based on your specific situation.

Many robo advisors use AI to inform the algorithms they use to get clients into portfolios. And, more often than not, these portfolios are constructed of some of the same types (if not the exact) broad market ETFs mentioned above. Use a robo advisor today and you’re likely going to have significant exposure to AI (especially if you tell it you want to be aggressive and/or have a long-term time horizon) using a tool that uses AI to make decisions. 

Keep Your Eye On The Next Wave Of AI In Investing

Over at the Wisdom Tree blog, they recently wrote about something The Juice finds super interesting that we will keep our eyes on. Here are the bullet points from a post worth reading. We’ll include it in today’s Freshly Squeezed section.

The asset management industry involves a wide range of job functions beyond portfolio management, such as personalized, predictive marketing, which AI has already proven capable of enhancing.

Investors may be hesitant to rely solely on AI-driven models due to the difficulty in understanding and explaining the underlying correlations and relationships that these models identify.

Advances in AI, such as Nvidia’s digital twin technology, could significantly impact investment strategies by providing more accurate predictions related to weather, climate and other factors affecting various industries. 

In the shell of a super interesting nut, it’s about using AI to come up with seemingly unrelated correlations that can help you make investment decisions. And creating predictive models with AI that, by, for example, anticipating something (like weather events), can help get out in front of investments. 

There’s no question that the big money will have access to this technology as it develops. However, we also think everyday investors will be able to access it, quite possibly as part of a robo-advisory offering.  

The Bottom Line: At first, we were a little creeped out by AI. However, we’re all in now, as long as companies act responsibly and the government regulates things accordingly. 

There are too many areas of life where AI can help us as individuals and as a collective to ignore the tech simply because it feels a bit too ahead of the times. For investors, the opportunity is now and ongoing to invest in as well as to use AI to invest.

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