Artificial intelligence (AI) has become a hot topic in 2023 as industries across the board try to integrate this technology into their day-to-day operations.
By now, some of the biggest names in the tech industry have latched onto the potential to develop and advance AI tools for the broader public.
OpenAI’s ChatGPT spurs rush of AI interest
AI tools have been at the frontlines of discourse throughout 2023 as ChatGPT has taken the world by storm. ChatGPT is a prompt-based AI model allowing users to ask specific questions to the program.
While the tool officially launched late last year, this year users have harnessed it to help them in their day to day lives. The impact has been felt in the tech world as well, as many corporations have introduced AI-related plans.
Severaldifferent variations of ChatGPT have hit the market, and competitors are suiting up to take on the current leader.
Major tech players integrate AI improvements
From a capital markets standpoint, it’s hard to argue that any company has benefited more from the AI boom than NVIDIA (NASDAQ:NVDA), which has a direct presence in both the way AI tools are used and in the entire computing landscape.
NVIDIA is an advanced computing firm looking to maintain a position in all aspects of modern computers. As part of this, NVIDIA has an AI division that offers business solutions and advancements to organizations in need of AI platform software or AI models and services. The company also has investments and partnerships to further advance its AI interests.
Shares of the company are up over 195.51 percent year-to-date as of June 30, and the company has continued to expand partnerships and investment deals across the AI landscape.
Other large technology players have moved forward with plans to capitalizing on the tremendous rise in interest from the ChatGPT tool created by OpenAI.
In fact, Microsoft (NASDAQ:MSFT), an investor in OpenAI, has integrated GPT-4 into its Bing search engine, meaning users can now use this AI tool directly.
This partnership was extended earlier this year, and Microsoft will now look to add AI solutions to Azure, its cloud computing solution for businesses.
“I think with all the talk about ChatGPT over the last six months or so, that has really brought artificial intelligence, at least the conversation about it to the forefront,” Allan Small, senior investment advisor with iA Private Wealth, told Global News.
Billion-dollar AI deal shows confidence in sector
Highlighting AI’s growing prominence, an AI startup locked in a US$1.3 billion investment from several technology investors at the end of June. Among its backers are Microsoft and NVIDIA, which will support the company as it seeks to develop a new generative AI assistant.
The company, Inflection AI, is led by Mustafa Suleyman, who previously co-founded DeepMind, the now Google-owned AI lab.
In a television appearance, Suleyman said it’s “an honor and a privilege” to be backed by these investors. “The potential upside is enormous,” the executive said.
Suleyman envisions a world where personal intelligence tools will suit users directly and said there’s a lot to do when it comes to figuring out where the entire industry may be headed. The executive said he expects Inflection AI to be up and running later this year.
Positive AI fund returns highlight opportunity
Investors who are evaluating novel markets often rely on exchange-traded funds (ETFs) as a way to get broad initial exposure before taking more direct positions.
Those looking at AI are in luck — various funds offer exposure to this rapidly growing market.
The Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) from Global X ETFs has enjoyed a great return so far this year, rising 39.18 percent year-to-date as of June 30. This fund has over 40 holdings whose focus is on the adoption and use of AI.
Another AI fund is the ROBO Global Robotics & Automation ETF (LSE:ROBO), which had gone up in value by 25.61 percent year-to-date as of June 30.
Similarly, the iShares Robotics and Artificial Intelligence Multisector ETF (ARCA:IRBO) had risen 28.11 percent as of June 30. This fund presents investors with a diversified approach since it holds over 100 securities and offers more exposure to Asian markets, including China and Japan.
In its prospectus, the fund managers for IRBO highlight the following risk associated with AI sector risk: “Robotics and artificial intelligence companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology.”
Additionally, the fund managers note that companies involved in the AI marketplace face intense competition and potentially rapid product obsolescence.
“Many of these companies are also reliant on the end user demand of products and services in various industries that may in part utilize robotics and artificial intelligence,” the document states.
Investor takeaway
The speed at which interest in AI business solutions are taking over shows the public’s willingness to engage with a novel technology. The money backing this industry also shows how much interest is building for the technology.
“Enterprises are increasingly turning to cloud-first AI strategies that enable fast development and scalable deployment,” Jensen Huang, CEO and founder of NVIDIA, said.
Securities Disclosure: I, Bryan Mc Govern hold no direct investment interest in any company mentioned in this article.
