This blog is for you if you’re wondering how to get rich investing in AI & ChatGPT. But heads up, you won’t. We can stretch the truth and say you could “invest” in your own education and start working in AI, but by just investing in it you’re unlikely to get rich anytime soon. Sorry.
Instead, I’ll show you how you can invest in the sector. I can’t guarantee anything about it making you rich though. And a huge caveat, none of this is financial advice or a recommendation to invest in anything. You need to figure that out for yourself! Do your own research!
First things first, Chat GPT is one of many AI platforms to hit the market recently. The ChatGPT & AI are kind of synonymous now, but there are a bunch of others out there too. I quite like WriteSonic, but that’s by the by.
We’re going to look at how you can invest in AI, why you would, and what options you’ve got. And just to give a fair warning, I’ll be using AI-generated information throughout this blog. Let me know if you spot which parts I wrote and which parts AI wrote…
What is AI and Why Invest In It?
ChatGPT is a language generation model developed by OpenAI. GPT stands for Generative Pre-trained Transformer. I’ve no idea what that means either, but whatever. OpenAI was founded in 2015 by a group of individuals; Elon Musk, Sam Altman, Greg Brockman, Ilya Sutskever, and Wojciech Zaremba. With the goal of promoting a friendly AI that benefits humanity. As opposed to the evil one that wants to enslave us.
ChatGPT was given access to billions of web pages and told to go learn. And it’s smart AF so it did. So instead of searching for an answer on Google or Bing, you can now ask ChatGPT. Instead of throwing up websites for you to read and get the answer from, ChatGPT figures out the answer for you. Then, freakishly, tell you the answer as if you’re having a chat with another human. It’s great, but it’s a bit creepy.
AI has the potential to save a lot of time and money for companies. Think of AI as the modern-day Spinning Jenny (if you don’t know what that is, ask ChatGPT).
Think about those chatbots on websites, does it have to be a human you’re talking to or could it be AI?
What about content for news outlets, it only needs to be written or dictated once and then thousands of variations can be created.
I wouldn’t want to be a translator at the moment, AI could be a much cheaper and quicker way to mass translate text.
You get the idea. Anything that has the potential to save the company money has value. And people will pay well for cost savings. The good thing about ChatGPT and OpenAI is they are open-source, so it’s available to everyone (for now).
So if the goal is how to get rich investing in AI, then from an investing standpoint it may not necessarily be how to invest in AI itself, but how to invest in things that will benefit from AI.
Investing in AI & ChatGPT
The AI industry is expanding massively and lots of companies are developing cutting-edge technology in the field. Broadly speaking, some options for investing in the AI revolution include:
- Direct Investment in AI Companies: One way to invest in the AI industry is to directly invest in AI companies that are developing innovative technologies. Some of the well-known AI companies include OpenAI, Google, Amazon, Microsoft, IBM, and NVIDIA.
- Direct Investment in Companies that will Benefit from AI: If a company currently has a high-cost basis for a process that could be streamlined by AI, they could provide a good investment opportunity.
- AI-focused Exchange-Traded Funds (ETFs): Another option is to invest in ETFs that are focused on the AI industry. These ETFs invest in a basket of companies that are involved in developing and implementing AI technologies.
- Technology Funds: Technology funds invest in a wide range of technology companies, including those in the AI industry. These funds provide diverse exposure to the tech sector and can offer a way to invest in the AI revolution.
- Startups: Investing in early-stage AI startups can provide the potential for high returns, but also comes with higher risks. It is important to carefully research and analyse the business model, team, and technology of any startup before investing.
The reality is that not all of these will be open to the average retail investor. For example, when it comes to investing in OpenAI specifically, they are a private company, and its stock is not publicly traded. This means that investment opportunities in OpenAI are limited to private equity and venture capital investments. These types of investments can only be made by accredited investors, and they typically involve a high degree of risk.
The same goes for most Startups. These are hard enough to invest in at the best of times, but right now AI-based startups are likely to be oversubscribed anyway, so for most people – don’t worry about it.
The big tech giants have been investing in AI for a while now. Intel, IBM, Microsoft, Amazon, Alphabet (Google), Apple, and NVIDIA are the big names. (Remember what I said before, don’t just invest in these because you read them. Research!)
Microsoft has had a lot of attention recently due to its billion-dollar investment into OpenAI – the maker of ChatGPT. They are likely to use elements of it in their Bing search engine, so that has the potential to shake up the fairly static internet search industry. You might not care, but the advertising revenue that could bring in is going to be substantial.
The downside to investing in AI via Microsoft is the sheer size of the company. Microsoft reported revenue of $46 billion. They believe that every 1% gain in the search advertising market share equates to $2 billion of revenue. Google isn’t going to take that lying down, but even if Bing can elbow out Google by a few %, it won’t dramatically increase the value of Microsoft.
I have a sneaking suspicion old Elon has kept some fingers in the OpenAI pie, so his companies might be benefiting from the growth in AI. But that’s more of a hunch than anything concrete.
The other way to look at it is to invest in companies that do well from integrating AI. McKinsey reckons companies that use AI earn 5% more revenue than those that don’t. The industries that have been paying the most attention to and integrating AI are healthcare, automotive, assembly line companies, and SAAS businesses.
Keep your ear to the ground of any companies in an industry you’re familiar with as they start to introduce AI into their business. Think of it has the potential to save them significant amounts of money, or if it can make them more productive. If so, might be time to ride that growth wave with them.
If you don’t want to take the risk of individual company investments, then you can invest in funds or collective investments. Exchange Traded Funds (ETFs) are the most common way nowadays for people to create funds. If all this is sounding confusing to you already, then you should probably pop over to the Masterclass section and pick the investing module.
According to justETF.com there are currently just two specific AI-focused funds to choose from in the UK. WisdomTree Artificial Intelligence UCITS ETF USD Acc, and L&G Artificial Intelligence UCITS ETF. (Not sure if I still have to say it, but don’t just invest in these because you saw them here).
If you expand the search to include the US and include ETFs that have an AI and tech slant to them, then the options open up considerably. The largest being QQQ (Nasdaq tracker) and VGT (Vanguard Information Technology), but perhaps the one with the most media coverage would be ARKQ (ARK Autonomous Tech & Robotics).
A lot of US ETFs aren’t available to those of us in the US, so we can just look on and wish we had such a large selection to choose from.
But the principle remains the same. Instead of trying to pick the individual company that will win from the AI revolution, instead just buy a small part of all the companies who are in the race. My preference is often for ETFs over individual companies, but that’s a personal thing and everyone’s investment requirements will be different.
There is a whole heap of ways to invest in AI at the moment. What you need to do is figure out what type works best for you. And probably if you even want to invest in AI specifically.
ETFs that cover the Nasdaq tend to be focused on generic “tech”. Whatever the flavour of the year is, somebody will be in there trying to make millions out of it. Instead of having to pay attention and pick the specific companies, just buy them all.
Over the long run, that tends to work best for most people. It’s not the best return possible, but it’s a good balance of return and effort.
If you want to find an investment style that works best for you, check out the Masterclass. If you’d rather work with me one on one, then go over to the consulting page to see if that works for you.
One final warning for those who are slow to learn… none of this is financial advice and I don’t recommend any of the companies or investments I’ve talked about. I own some of them. I’m not telling you which. But my circumstances are different from yours, so what’s right for me might not be right for you. Speak to a professional or do your own research and make your own decision.