Summary: Artificial intelligence (AI) is emerging as potentially the most transformative technology in recent decades, reshaping computing, manufacturing, engineering, and many other industries. As the demand and hype for artificial intelligence steadily grows, investing in AI stocks could be a solid way to diversify your portfolio. To invest in AI stocks, you can use a regulated and trusted online exchange platform such as eToro.
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What is artificial intelligence?
Artificial Intelligence
AI technology has helped usher in an age of remarkable progress in various industries, including healthcare, finance, robotics, and engineering. Thanks to AI’s ability to learn on its own, solve problems, automatize routine operations, as well as comprehend and generate language, the technology has the potential to become an essential and invaluable tool.
What are AI stocks?
What are AI stocks?
As the AI industry is starting to enjoy immense popularity, investing in companies in AI stocks appears enticing due to hype alone, despite the fact that a lot of investors and analysts are raising ethical concerns about the potential misuse of AI, for example, to generate deepfakes.
However, the buzz is not the only factor that attracts investors. AI is a rapidly growing sector, and if some of the predictions come true, AI technology has the potential to transform virtually every aspect of our lives. Microsoft CEO Satya Nadella, for example, has already stated that the company plans on incorporating some form of AI functionality in virtually all of its products, which inspires trust in the sector.
Moreover, Microsoft and other tech behemoths have collectively poured over $27 billion into around fifty AI-focused companies in 2023 alone. Consequently, both private individuals and companies are seeking to trade or invest in AI to be the first to capitalize on the highly anticipated surge of technological advancements projected to dominate the decades to come.
How to invest in AI stocks? Step-by-step process
To invest in artificial intelligence stocks, take the following five steps:
Step 1: Choose a company to invest in
As mentioned, AI attracts a broad range of investors from diverse sectors. That is why analyzing the AI market becomes challenging as soon as we try to keep up with the rapid pace of technological advancements in the AI industry and the sheer multitude of differing opinions individuals hold on the subject.
Nonetheless, the multiplicity of uses AI solutions have found in recent years has its positive sides, too. Namely, by being so competitive, the AI industry opens a lot of opportunities for investors looking to gain exposure to a large number of sectors, from chip manufacturing to autonomous vehicles (AVs), to e-commerce, etc.
As of Q4 2024, the five most popular AI stock investments are:
- Microsoft (NASDAQ: MSFT);
- Alphabet (NASDAQ: GOOG);
- Amazon (NASDAQ: AMZN);
- Nvidia (NASDAQ: NVDA);
- IBM (NYSE: IBM).
1.Microsoft
The company’s AI focus: Varied
2024 Q4 Market capitalization: $3.36 trillion
Microsoft’s partnership with OpenAI and its hefty $10-billion investment in ChatGPT have established the Seattle tech titan as a major player in the AI arena. In fact, according to the company, it contributed to the 8.3% increase in shares seen in April 2023.
Thanks to its established presence in various industries, Microsoft’s trust in AI promises opportunities for investors seeking exposure to the AI market. This is particularly relevant for those interested in indirect investments in private companies like OpenAI.
Microsoft stock price
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2.Alphabet
The company’s AI focus: Varied
2024 Q4 Market capitalization: $2.41 trillion
Being virtually synonymous with internet browsing, Google and its parent company, Alphabet, are no strangers to artificial intelligence. The company’s interest in AI has given rise to a number of products, such as Bard, Google’s ChatGPT competitor.
Additionally, Google offers enterprise-level AI products, equipping users with the necessary tools to construct third-party AI applications and explore extensive language models using Google Cloud.
What’s more, Alphabet has so far invested over $30 billion in various AI start-ups, such as Anthropic, which received a $300 million-dollar investment from Alphabet in 2022.
Note
Alphabet stock price
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3.Amazon
The company’s AI focus: Text-to-speech (TTS), e-commerce
2024 Q4 Market capitalization: $2.43 trillion
Amazon has been a major proponent of AI in text-to-speech (TTS) spaces for a long while now, with Amazon Polly being one of the most widely used and natural-sounding TTS tools in the world.
Further, by focusing on AI advancements within its cloud service, Amazon Web Services (AWS), the company has given a number of third-party enterprises the freedom to develop a diverse array of generative AI applications, including chatbots, customized search tools, and image generators.
Amazon stock price
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4.Nvidia
The company’s AI focus: Graphics cards
2024 Q2 Market capitalization: $3.13 trillion
Nvidia is at the forefront of the graphics processing units (GPUs) market, producing hardware that helps empower a wide range of AI-dependent devices and facilitating the acceleration of AI computations. Thanks largely to its involvement with AI, the company reported $11.00 billion for Q2 of fiscal 2024.
Nvidia’s chips are also becoming integral in the development of autonomous vehicles (AVs), enabling them to make intelligent driving decisions in real time. This advancement in AI-powered transportation has the potential to revolutionize the automotive industry and pave the way for safer and more efficient mobility solutions.
Nvidia stock price
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5.IBM
The company’s AI focus: Varied
2024 Q4 Market capitalization: 211.72 billion
A veteran of the computing industry, IBM provides a comprehensive range of AI-based solutions, most notably its AI assistant, IBM Watson. With Watson, companies can optimize their resource allocation, which helps prioritize critical data and enhance workflow.
Recently, IBM’s daughter company, Dialexa, has started exploring the capabilities of AI within digital healthcare. If the venture is fruitful, investors will have a chance to gain exposure to both AI and the medical industry.
IBM stock price
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Step 2: Choose a broker and set up an account
The next step in investing in AI stocks is to find a reliable online broker. To find one that will align with your investment goals and strategies, consider factors such as:
- Reputation: Consider only brokers with licenses issued by authorities such as the Financial Conduct Authority (FCA) or Financial Industry Regulatory Authority (FINRA);
- Fees: Lower fees are preferable, but don’t neglect factors such as security, helpful customer support, analytics tools, etc.;
- Offerings: Look for a broker that offers all of the most popular investment products, such as mutual funds, ETFs, or options.
For a secure and convenient investment in AI, we recommend eToro, a regulated platform with over 30 million investors trading in more than 30 commodities and 3,000 other assets.
Highly Rated Stock Trading & Investing Platform
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Invest in 2,800+ stocks and other assets including 70+ cryptocurrencies and commodities.
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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.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
Another trusted online exchange is Interactive Brokers. It offers commission-free trading, global stock-trading on 90+ market centers, as well as fractional shares.
Step 3: Fund your account
Once you’ve chosen a broker and made an account, you can transfer some funds to it. Typically, you can simply link your bank account to your broker. However, you’ll sometimes have to use another payment method like PayPal (PYPL), especially if you are using prepaid cards, which eToro,f or example, does not accept.
Step 4: Place a trade
When you transfer your funds, you can place a trade to buy shares of the AI company you have chosen.
For example, if you are investing in Amazon on eToro, head to the broker’s website, look up AMZN in the search bar, click TRADE and then INVEST, and specify how many shares you want to buy. Finally, choose your preferred order type (market, limit, options) to finalize the purchase.
Step 5: Monitor and manage your investment and the market competitors
Last but not least, to ensure you can achieve your financial objectives, it is important that you constantly review your investment.
Regularly evaluating your investment and keeping track of how the competitors on the market are doing allows you to assess the performance of the company you have invested in and adjust your strategy accordingly.
Most importantly, try to remain mindful of the potential market. For starters, avoid making impulsive decisions based solely on short-term price fluctuations. After all, there is nothing to prove that they are going to reflect the long-term prospects of your investment.
As your experience grows, you will have to analyze the company’s fundamentals and conduct some technical analysis to make sense of the price trends and patterns on stock charts. If you are feeling lost, you can hire professional financial assistance.
Is it a good time to invest in AI?
Generative AI is growing quickly, and constant innovation appears to be a sure signal of future growth and thus more potential investment opportunity. Right now, AI is reshaping industries like healthcare, computing, and finance, the sector being projected to reach $826 billion by 2030 in the US alone. However, stock investments are inherently risk, and exact timing depends on each individual’s risk tolerance and overall trading strategy.
Common mistakes to avoid when investing in AI
Some of the most common mistakes to avoid when investing in AI include:
- Lack of research: Failing to conduct enough research on the AI company you are investing in can have catastrophic consequences. Before every investment, try to learn about the company’s background, its role in the AI sector, what the public has to say about it, etc.;
- Ignoring ethical considerations: Investors raise ethical considerations in regard to AI for a reason. If the company you are investing in is known to neglect privacy, to be biased, or to ignore the potential threats AI might pose, your investments will not be fruitful;
- Falling for hype: AI has generated a lot of buzz, but many investors are still skeptical of its potential, and there is no guarantee that hype alone is going to generate profit for the company whose shares you are buying;
- Overestimating AI: AI is undoubtedly powerful technology, but it is not the solution to all problems. Therefore, avoid investing in companies that overestimate or over-exaggerate the role of AI, especially in more obscure niches.
Top 5 AI-related stocks to invest in
| Company | 2024 Q4 Market capitalization |
| Microsoft (NASDAQ: MSFT) | $3.36 trillion |
| Alphabet (NASDAQ: GOOG) | $2.41 trillion |
| Nvidia (NASDAQ: NVDA) | $3.13 trillion |
| Amazon (NASDAQ: AMZN) | $2.43 trillion |
| IBM (NYSE: IBM) | 211.72 billion |
Pros and cons of investing in AI stocks
Pros
- AI has high growth potential;
- Investing in AI can give you exposure to a large number of industries and sectors;
- It can be good for portfolio diversification.
Cons
- There are a lot of concerns about the technology;
- The industry is still not entirely regulated;
- Some companies tend to neglect privacy and safety concerns;
- Hype can easily mislead unwary investors;
- The market is volatile and highly competitive.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Conclusion
In conclusion, learning how to invest in AI stocks will open a large window of opportunities for those who wish to capitalize on the growth of this potentially transformative technology. However, it is crucial that you approach all AI investments with careful consideration and having done a lot of research.
Getting to know the company you are investing in, understanding the competitive landscape, and staying in touch with the ethical considerations leaders in the field and the general public are raising are crucial to making informed investment decisions.
Finally, it is important to maintain a long-term perspective instead of falling for hype. AI technology is still evolving, and we are yet to see what kind of effect it is going to have on various sectors. Therefore, try not to fall prey to short-term market fluctuations and base your decisions on thorough research and expert opinion.
FAQs about how to invest in AI stocks
What are AI stocks?
AI Stocks are shares in companies involved with AI technology in one way or another. That is, either directly, by developing and advancing AI technology themselves or indirectly, by supporting and aiding companies that are.
Can you buy artificial intelligence stocks?
Yes, you can buy AI stocks by investing in companies that focus on or invest in AI technologies.
How to invest in AI stocks?
To invest in AI stocks, you can buy shares in AI-involved companies on regulated online exchanges platforms like eToro.
What are the best AI stocks to invest in?
Some of the most widely bought AI stocks as of 2023 include Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), IBM (NYSE: IBM), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG).
What are some artificial intelligence stocks under $10?
For penny AI stocks, check out our guide on 3 artificial intelligence penny stocks to buy in 2025.
Highly Rated Stock Trading & Investing Platform
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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.
