Investing in Artificial Intelligence Stocks? What to Know About AI

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Some market experts suggest that investing in Artificial Intelligence stocks has received a boost since ChatGPT became the “talk of the town”. Of course, artificial intelligence is not a new concept as developers have been working on AI projects for many years.

However, ChatGPT seems to have opened a whole new AI world that many of us probably couldn’t imagine. ChatGPT has also sparked the so-called “AI wars” between companies such as Microsoft and Google.

Should you consider investing in artificial intelligence stocks? Is ChatGPT and other similar tools only helpful to internet users or does their release provide an incentive for more investing in AI?

This blog will give you some valuable information regarding investing in AI so stay tuned.

What Does Artificial Intelligence (AI) Mean?

Artificial intelligence is quite a large topic with many applications that may get you bored if we start analysing it. As we wouldn’t like to do that, the IBM website provides a simple explanation: “Artificial intelligence is a field, which combines computer science and robust datasets, to enable problem-solving. It also encompasses sub-fields of machine learning and deep learning, which are frequently mentioned in conjunction with artificial intelligence. These disciplines are comprised of AI algorithms which seek to create expert systems which make predictions or classifications based on input data.”

Types of Artificial Intelligence: Weak or Strong AI?

One more thing that you should know about AI is that there are two types of it: Strong and weak. Strong AI is used in complex systems such as self-driving cars or surgical equipment. Weak AI is used in systems that are to perform one specific task such as the Google Assistant in your Google Home devices, Alexa etc. By now, you may be wondering where ChatGPT belongs; the answer would be that it belongs to the Weak AI group.

Artificial Intelligence Market Grows According To Analysts

Financial analysts expect the Artificial Intelligence market to grow exponentially by 2030 while boosting GDP figures for local economies across the world. A survey released by PricewaterhouseCoopers (PWC) noted that “45% of total economic gains by 2030 will come from AI-related product enhancements, stimulating consumer demand.” PWC economists suggest that “the greatest economic gains from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost), equivalent to a total of $10.7 trillion and accounting for almost 70% of the global economic impact.”

An Artificial Market survey published by Grand View Research (GVR) said that “the global artificial intelligence market size was valued at USD 136.55 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030.” GVR market analysts noted: “AI is proven to be a significant revolutionary element of the upcoming digital era. Tech giants like Amazon.com, Inc.; Google LLC; Apple Inc.; Facebook; International Business Machines Corporation; and Microsoft are investing significantly in the research and development of AI. These companies are working to make AI more accessible for enterprise use cases. Moreover, various companies adopt AI technology to provide a better customer experience.”

ChatGPT Sparks The AI Wars

ChatGPT is an artificial intelligence chatbot developed by OpenAI. The prototype large language model (LLM) was released on November 30th 2022 with ChatGPT becoming talk of the town in January as more and more people wanted to check what it could do for them. By February 2023, OpenAI released a subscription-based version that allowed quick access to the chatbot, which couldn’t manage the enormous number of users in its free version.

ChatGPT impressed many of us with its speed even though the first versions were providing search results based on 2021 data. Some others questioned how the chatbot could change the labour market and added that the use of AI could create moral dilemmas and information filtering issues.

Investors on the other hand started wondering about the new investment opportunities being created, while large companies such as Google and Baidu announced right away their own chatbots to counter ChatGPT’s successful launch.

AI Wars: Microsoft vs. Google

The rivalry between Microsoft and Google is strong and thanks to ChatGPT it will likely become even stronger. At first, Google seemed to be caught by surprise but quickly vowed to react by presenting its own chatbot called Bard. In China, Baidu presented Ernie Bot, its own version of an AI chatbot assistant.

But where is Microsoft in all this? Years ago, Microsoft decided to invest in OpenAI’s project, so we could say that ChatGPT wears Microsoft’s shirt in this game.

Microsoft Invests In OpenAI And Chat GPT

Microsoft was one of the first to recognise the potential of AI. In 2019, Microsoft invested one billion US dollars into OpenAI to assist the company in developing its software. Early in 2023, Microsoft executives announced that the company would invest $10bn as some media reports suggested that the firm founded by Bill Gates sought to increase its share in OpenAI to 49%.

Microsoft has said it would like to integrate Chat GPT in its popular products such as Microsoft 365, its Edge browser, Azure, its Bing search engine etc. Microsoft’s blog said: “All up, Bing has grown to exceed 100 million daily active users and daily installs of the Bing mobile app have increased 4X since launch. As a result, we are seeing growth of Bing share and it follows the eight straight quarters of growth in our Microsoft Edge browser share. We’re excited about continuing to make Bing more accessible by its introduction to the Windows taskbar, reaching over half a billion customers every month.”

Google Bard: A ChatGPT Alternative

Google seemed to be taken by surprise when OpenAI released ChatGPT. Some suggested that Google’s search engine success story was about to end. Google’s executives were cornered so they made public their own chatbot called Bard. The release was not accompanied by positive comments as Bard’s presentation went south due to technical difficulties. However, Google’s developers seem to have improved Bard offering new features as shown on Google I/O 2023 day.

According to a Financial Times report, Google has invested more than $400mln into a tech start-up called Anthropic.  Anthropic develops its own chatbot named Claude.

Google also owns Deep Mind, a tech start-up as it paid more than $500 mln to acquire it in 2014. DeepMind’s founder, Demis Hassabis, told Wall Street Journal reporters that some sort of artificial general intelligence (AGI) could be available in the next years, delivering impressive results.

Commenting on ChatGPT and other chatbots, Demis Hassabis said that the Large Language Models (LLMs) that we all now know, cannot be compared with AGI noting: “In terms of artificial general intelligence, OpenAI, ChatGPT stuff: it’s like saying we’re going to jump to the moon. That’s really how I compare AGI with all the large language model companies which are popping up. They are very limited. How you actually get them to do certain things is still in its infancy. This is very much: Google is not born yet, but Yahoo is.”

China Joins The AI Wars With Baidu’s Ernie Bot

Baidu, the largest search engine in China, presented Ernie (Enhanced Representation through Knowledge Integration) Bot. Ernie Bot is Baidu’s Large Language Model and is considered the Chinese reply to ChatGPT. Media reports coming from China said that Chinese regulators had urged tech firms to restrict access to ChatGPT services offered to their users.

However, it is no secret that Ernie Bot has not yet stolen the hearts and minds of users and investors. On March 27th, Baidu cancelled the public launch of Ernie Bot to satisfy the strong demand of 120,000 firms that had signed up to test the new AI-powered assistant. Some analysts also suggest that Ernie Bot is several months behind ChatGPT in terms of development. As the competition is heating up, Baidu will have to do much more to cover the lost ground against its US rivals.

How To Invest In Artificial Intelligence Stocks?

You might be interested in learning how to start investing in artificial intelligence stocks now that you have some background knowledge about them.  In order to have access to the financial markets, the first thing you need to do is select a brokerage.

At Admirals, we offer the ability to invest in over 4,500 stocks and more than 200 Exchange-Traded Funds (ETFs).

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.