NVDA - What is Artificial Intelligence Investing?
Artificial intelligence (AI) has been pegged by some as the fourth industrial revolution, with many industries and countries investing heavily in it.
According to Statista, it is estimated that there will be massive growth in revenues from AI over the next several years, reaching US$59.74 billion in 2025, up from US$1.37 billion in 2016.
Meanwhile, a report from McKinsey Global Institute predicts that the potential value of AI could be in the range of US$3.5 trillion to US$5.8 trillion in value annually across nine business functions in 19 industries, including retail, banking and healthcare systems and services.
McKinsey highlights how AI has the potential for over 400 use cases and applications such as regression analysis, statistical inference, clustering and recurrent neural networks.
With that in mind, here the Investing News Network provides a comprehensive look at AI, with an overview of how investors can step into this ever-growing sector to help better answer the question what artificial intelligence investing is.
What is artificial intelligence?
As NVIDIA (NASDAQ:NVDA) puts it, AI is defined as human intelligence exhibited by machines.
NVIDIA’s report said AI is transforming the world and that much of its origins stretch back to the post World War II era. The company credits the development of open source frameworks for creating a revolution, which was backed by the development of graphics processing units with faster and more powerful chips to support workloads of machine learning and deep learning.
While “Narrow AI” is currently in play, the natural progression is towards “General AI,” which in concept is a machine that has human senses and does things just like humans do.
AI and machine learning often get intertwined. Eric Schmidt, chairman of Alphabet (NASDAQ:GOOG), explained the difference between these two aspects of the fourth industrial revolution.
Schmidt explained that machine learning is “how the system looks at the complex sets of data” and learns from the data, while AI is how the data is expressed.
Further, Schmidt said that the terms are used interchangeably, and pointed to Google’s Google Photos and Google Translate products as examples of AI in play.
“We think of it as a human like experience and intelligence but what really happened is that machine has learned from patterns,” he said.
The evolution of artificial intelligence
The evolution of AI is progressing at a rapid speed as demonstrated by NVIDIA, which unveiled a technique that allowed robots to work with humans. It was created using a deep-learning-based system that the company’s research team claimed to be a first of its kind. Deep learning is a subset of machine learning and AI.
While machine learning was seen as an approach to achieving AI using large amounts of data and large amounts of coding to get the job done, deep learning went a step further. In this technique, multi-layered artificial neural networks are used to deliver state-of-the-art accuracy in tasks such as object detection, speech recognition, image recognition, facial recognition and language translation.
Google itself has been pushing for AI as seen from its I/O conference held in May, at which Google unveiled a host of products that made use of AI. Of note from the conference was the new technology called Google Duplex, which is an evolution of Google Assistant.
According to Schmidt, small startups are also making investments in AI, with the biggest area being the medical industry.
Schmidt said that these healthcare classic AI startups are using new techniques to cure or diagnose cancer and to find new techniques to discover drugs. Schmidt said that AI in the global medical care industry will be “immense.”
Outlook for artificial intelligence
According to a Grandview Research report, the AI market is projected to reach US$35.87 billion from direct revenue sources by 2025 and grow at a compound annual growth rate (CAGR) of 57.7 percent between now and then.
The report states that North America will largely dominate the space due to high government AI investment, leading players and a strong technical base.
In terms of the fastest growing market, the report states that the Asia Pacific region is at the top of the list thanks to improvements in information storage capacity, high computing power and parallel processing. The report indicates that those three areas have been a part of why AI has been implemented so rapidly in industries such as automotive and healthcare.
Other market projections include Research and Markets‘, which suggests that the AI market is expected to reach US$190.61 billion by 2025, up from US$21.46 billion in 2018, growing at a CAGR of 36.62 percent during the forecast period. Fuelling that growth will be AI solutions such as virtual assistants, marketing, search advertising, identity access management, intruder detection and cybersecurity for the future.
Ways to invest in artificial intelligence
With such growth potential in the AI market in the coming years, there are a number of ways investors can dive into the sector, including:
For those who are new to investing and would rather invest in a market rather than a specific company, ETFs are a popular way to do so. Here’s a brief overview of three AI ETFs for investor consideration:
- Global X Robotics & Artificial Intelligence Thematic (NASDAQ:BOTZ): The fund began on September 12, 2016, and has 29 holdings with the top holdings being Mitsubishi Electric (TYO:6503), Intuitive Surgical (NYSE:ISRG), Keyence (OTC Pink:KYCCF) and ABB (SWX:ABBN).
- ARK Industrial Innovation ETF (NYSEAMERICAN:ARKQ): This fund was started on September 30, 2014, and has 39 holdings, with its top holdings being Tesla (NASDAQ:TSLA), Stratasys (NASDAQ:SSYS) and NVIDIA.
- Robo Global Robotics and Automation Index (NASDAQ:ROBO): The Robo Global Robotics and Automation Index began on October 22, 2013, and has 88 holdings. Its top holdings include YASKAWA Electric (TYO:6506), Oceaneering International (NYSE:OII) and Daifuku (TYO:6383).
For investors looking to put money into AI stocks, there are a number of AI companies to invest in:
- Diagnos (TSXV:ADK): A publicly traded Canadian corporation with the mission of early detection of critical health issues through the use of AI. The company operates in 16 countries with 131 screening sites.
- NexJ Systems (TSX:NXJ): The company is a provider of customer management products for the financial services, portfolio management and wealth management industry, with the company using AI to improve customer service and increase financial advisor and banker productivity. The company has clients throughout North America, Asia Pacific and Europe.
- ProntoForms (TSXV:PFM): ProntoForms is one of the leading providers of smart mobile forms for enterprise. The firm’s solution is used to collect and analyze field data with smartphones and tablets. ProntoForms claims to have over 100,000 subscribers who harness the intuitive analytics.
- Venzee Technologies (TSXV:VENZ): Venzee is a software as a service company that was launched in 2014 to help ecommerce vendors and retailers to transform and deliver data for the digital supply chain. The company claims to have clients in 100 countries.
- VIQ Solutions (TSXV:VQS): The company is a leading technology and service platform provider for digital evidence capture and content management. The company’s solution are used in over 20 countries with tens of thousands of users.
In sum, with so much growth in the AI sector over the coming years, now may be the time more than ever to jump into this space.
This is an updated version of an article originally published by the Investing News Network in 2018.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Venzee Technologies is a client of the Investing News Network. This article is not paid-for content.