Investing directly in companies that are heavily focused on artificial intelligence (AI) and actively integrating it into their products and services currently presents significant growth potential.
This is partly due to current industry trends and the growth of individual stocks, however, direct investments are risky due to intense competition, regulatory uncertainties, and market volatility.
Well known tech giants are leaders in AI development but emerging firms from across the globe are also pushing the boundaries of AI, leading to market disruption. For instance, an emerging Chinese firm introduced their own AI platform, causing a well-known name to suffer a 17 per cent tumble in share price, though they have now mostly recovered.
Reducing risk with AI-focused ETFs
AI-focused ETFs, offer diversified exposure to the AI industry.
Diversification helps spread risk by investing across multiple companies and sectors, reducing the impact of any one underperforming asset. However, while this approach can smooth returns and lessen volatility, it does not eliminate risk entirely.
External factors, like regulatory changes or economic downturns, can still impact the broader market.
If you are looking to invest in AI without the heightened risk of single-share volatility, you might want to consider ETFs.
Investing in AI? Speak to our independent financial advisers.
