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Summary: Databricks is not a publicly listed company, meaning its stock is unavailable to the general investing public. However, there are other ways to gain exposure to the company through indirect investments in the AI sector. In short, investors who strive to buy Databricks stock can do so indirectly by purchasing shares of relevant AI companies through trading platforms such as eToro.
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What is Databricks?
Over 9,000 organizations globally, spanning every sector and organizational type — including Disney (NYSE: DIS), Rivian (NASDAQ: RIVN), HSBC (NYSE: HSBC), and Shell (LSE: SHEL) — count on Databricks for extensive data engineering, collaborative data science, end-to-end machine learning, and business analytics.
Databricks IPO
Valued at a staggering $38 billion in August of 2021, near the market’s peak, Databricks was widely considered among the top contenders for an initial public offering (IPO) in 2021 or 2022. Unfortunately, since then, there have been no indications of the company planning to go public.
Given the current stagnation in the market for tech IPOs and the prevailing economic downturn, it appears unlikely that Databricks will opt for a public listing. Particularly after its closest market competitor Snowflake (NYSE: SNOW), lost a third of its value since its 2020 listing, the largest software IPO ever.
How to buy Databricks stock?
As a private company, Databricks’ stock is not publically listed and, therefore, not accessible to the general investing community. Still, there are ways to invest in the AI sector by looking for alternative or indirect investment options.
How to invest in Databricks? Step-by-step process
Databricks stock is not available in the open market. As a result, if you’re interested in exposure to the data analytics company, you will have to invest indirectly. Luckily, there are several ways to accomplish this; let’s break down the process step by step.
Step 1: Research the market and choose a company to invest in
One way of getting exposure to Databricks is to invest in some of the major shareholders and investors with a stake in the company. Some notable public companies that have invested in Databricks include:
- Microsoft (NASDAQ: MSFT);
- Amazon Web Services (NASDAQ: AMZN);
- CapitalG, a growth equity firm under Alphabet Inc. (NASDAQ: GOOG/GOOGL);
- Salesforce Ventures (NYSE: CRM).
Buying shares of these companies will give you indirect exposure to Databricks as well as the AI sector.
Alternatively, if you want more diversified exposure to the growing AI sector, you can invest in an AI-focused ETF that offers exposure to a wide range of the best AI companies, reducing the risk associated with investing in a single company, such as:
- ROBO Global Robotics and Automation Index ETF (NYSEMKT: ROBO);
- iShares Robotics and Artificial Intelligence ETF (NYSE: IRBO);
- First Trust Nasdaq Artificial Intelligence and Robotics ETF (NASDAQ: ROBT).
If you want more concentrated exposure to cloud technology, on the other hand, consider these ETFs:
- First Trust Cloud Computing ETF (NASDAQ: SKYY);
- ARK Next Generation Internet ETF (NYSE: ARKW);
- WisdomTree Cloud Computing Fund (NASDAQ: WCLD)
Note
All the above-mentioned individual company stocks and ETFs are available through your regular retail broker. In the following section, we’ll investigate how best to pick a broker, along with a few recommendations for potential choices.
Step 2: Choose a broker
When assessing brokers, make sure you understand the following:
- Costs: Trading costs can eat into your returns, so it’s essential to understand a broker’s fee structure, including commission fees, account maintenance fees, and any other charges. Luckily, you can expect commission-free stock and exchange-traded fund (ETF) trading from most online brokers;
- Range of offerings: Verify that the broker provides access to the particular asset classes that interest you, such as stocks, ETFs and mutual funds, bonds, commodities, cryptocurrencies, or forex, as well as more complex derivative financial instruments like options and futures;
- Platform usability: The trading platform should be user-friendly and match your proficiency level;
- Regulation and security: Ensure the broker is regulated by the Securities and Exchange Commission (SEC) and that they have implemented appropriate measures to protect your data and funds;
- Account minimums: Some brokers require a minimum amount to open an account. Make sure this aligns with your budget;
- Fractional stock trading: Fractional shares allow investors to purchase stocks or ETFs by the dollar amount, particularly helpful if you’re under a strict budget or intend to implement a dollar-cost averaging (DCA) strategy.
To securely invest in any of the AI industry players, consider these brokers:
1. eToro
- Commission-free stock trading;
- 2,000+ stocks from 17 exchanges;
- Fractional shares available;
- User-friendly platform.
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eToro USA is registered with FINRA for securities trading.
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- Fractional shares available;
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- No account minimum.
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Step 3: Fund your account
Now it’s time to fund your account. Several options will typically be available to you, including connecting a bank account directly, utilizing a debit, credit, or prepaid card, or choosing a third-party payment provider like PayPal (PYPL).
Step 4: Decide how much you want to invest
Before deciding on the amount, ask yourself these questions:
- Can I afford to lose this money without affecting my standard of living?
- Have I covered my daily living costs, emergency savings, and other financial obligations such as debt repayments?
Of course, your risk tolerance will also significantly influence this decision, as the amount you are prepared to invest will vary based on your comfort level with potential losses.
Step 5: Place your order
Once you’ve determined how much you want to invest and what company or ETF to invest in, you’re ready to place your order. Do this by logging into your brokerage account, searching for the relevant ticker symbol, and clicking on ‘Open Trade’ or ‘Buy.’ To execute your order, choose between a market or a limit order.
Step 6: Monitor your investment
Review your investment regularly to ensure you’re on track to reach your financial goals but avoid making impulsive decisions based on short-term market movements.
Should you buy Databricks stock?
Before investing (indirectly) in Databricks, it’s critical to deepen your knowledge about the industry and familiarize yourself with the different facets of AI, given that numerous investment strategies will be available to you. Some investors may prefer a direct stake in AI and the associated technologies to fully exploit this growth sector. Others, however, may tread more carefully, for instance, by putting their money into well-established blue-chip companies that either already have investments in AI or are poised to gain significantly from the expansion of AI usage.
Once you’ve determined the segments of the AI market you’re interested in and decided on the extent of exposure you wish to take on, ensure you utilize traditional investment analysis—both fundamental and technical— to gauge the strength of your chosen investment.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about how to buy Databricks stock
Is Databricks public?
Databricks is a private company, and its stock is not publically traded.
How to invest in Databricks?
Since Databricks’ stock is not publicly listed, you cannot invest in the company directly. You can, however, invest in stocks and ETFs in the cloud technology or data processing industry to gain broad exposure to the AI sector.
Who owns Databricks?
Various entities and individuals, including the founders Ali Ghodsi, Matei Zaharia, and Ion Stoica, and investment firms such as Franklin Templeton and Andreessen Horowitz own Databricks. Tech behemoths such as Microsoft, Google, and Amazon also hold a stake in the company.
Highly Rated Stock Trading & Investing Platform
-
Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
