Which AI Stocks Make Sense to Buy Now?

New (and better) artificial intelligence (AI) hits the market each year. Yet, we’re still likely early in artificial intelligence technology. So, imagine what will be available 20 years from now! If you, too, imagine an explosion of AI technology in the future, you may want to invest. We have some suggestions if you’re asking yourself which AI stocks make sense in 2023.

Why Directly Buying AI Stock Is Difficult

As impressive as AI is, we’re in the infancy of this technology. As a result, “‘It can be difficult to get exposure to pure-play AI companies because this is a relatively new technology,’ says John Cunnison, vice president and chief investment officer of Baker Boyer Bank. ‘Most new, innovative AI companies are small and funded by private capital and are not publicly traded’” (U.S. News & World Report).

What AI Stocks Make Sense to Buy Now

Since investing directly in an AI company is challenging, you have two other options.

Invest in Companies That Benefit from AI

Microsoft (MSFT)

Microsoft is utilizing AI in many applications, from healthcare to Bing’s search engine. In addition, “Microsoft has gotten a lot of buzz. . .thanks to its partnership with OpenAI. Microsoft. . .recently put. . .$10 billion in OpenAI following the launch of ChatGPT. Microsoft unveiled a new version of its Bing search engine, powered by ChatGPT, and the company is racing to incorporate GPT features across its product portfolio, including its Azure cloud infrastructure service, Edge web browser, Office productivity software suite, and Bing” (The Motley Fool).

Amazon (AMZN)

Amazon uses AI in every aspect of its business. AI suggests recommendations to Amazon users based on previous choices. Amazon uses AI to help determine delivery driving routes and to power Amazon’s Alexa. If you want to invest in a company that uses AI extensively, Amazon is your best bet.

There are advantages and disadvantages to investing in individual stocks.

The advantages are that if you make an intelligent choice, you could see a large potential upside on your investment – as much as ten or twenty times your purchase price. This is not uncommon – as Amazon and Microsoft’s share value have both increased more than ten fold in the last decade. Other advantages are that you can vote on management changes or other management policy because you own shares. A third advantage is that you can estimate your stock’s intrinsic value.

Disadvantages of investing in individual stocks are risk – they’re far more risky than holding mutual funds or exchange traded funds.

Invest in an AI Centered Exchange Traded Fund (EFT)

These two EFTs are good choices:

Global X Artificial Intelligence & Technology ETF (AIQ)

Trading as AIQ, this ETF includes household name companies that benefit from, and will likely continue to benefit from, AI. The companies include Meta Platforms Inc. (META), Nvidia Corp (NVDA), Tesla Inc. (TSLA), and Apple Inc. (AAPL).

Another benefit of this ETF is that these companies are well-known and well-established, so investing here has less risk for cautious investors.

iShares Exponential Technologies ETF (XT)

If you’re less interested in investing in Big Tech, you can “buy XT, which currently holds 197 global tech companies tracked by the Morningstar Exponential Technologies Index. The ETF tracks nine themes, with notable ones like cloud computing, robotics, and big data analytics that are expected to benefit from advancements in AI” (U.S. News & World Report).

Final Thoughts

Which AI stocks make sense in 2023? These four are excellent choices to start investing in AI. First, however, conduct your own research as there are many more ETFs to choose from and companies that use AI heavily.

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Melissa Batai

Melissa is a freelance writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking.