The world is moving toward automation, with Artificial Intelligence (AI) as the driving force behind it. AI is changing business structures and ecosystems, resulting in widespread exponential company growth. While there are signs of AI dating back decades, its growth has been spectacular in recent years. Machine learning (ML), a subset of AI, is progressing even faster, and financial institutions are among the early adopters. As time goes on, applications of AI in finance, particularly investment trading, will become less surprising, as they are expected. But what is more surprising is the fact that although AI isn’t a newborn child, it has not been a choice of retail investors. But why? Let’s dig in.
The potential of AI-based models is seen to be such that long-term investors in AI equities have a good chance of beating the market. According to PWC Global, AI-based models would contribute $15.7 trillion to the economy by 2030, resulting in a 14% increase in global GDP. AI has been infused into the DNA of almost every company model. They take on projects involving A.I. if they are not AI-based. If we say AI is all around us, we are not exaggerating. It's AI if you're surprised by Netflix suggestions or Google ads. AI has the ability to mimic the human brain, making it one of a kind among technologies in that it can learn and solve issues that would usually need human intellect. It allows quicker decision-making and has significant promise in solving lengthy development issues, widely in the field of healthcare and finance. Industry Growth, Competitive Dynamics, a strong product as an outcome and better rewards for the risk has led to the high valuation of AI-based companies.
One could ask why, if these equities are so good, they are now down. The markets are wonderful, evolving at a rapid rate, with fintech booming and new asset classes reaching historic levels of investor adoption. However, not everyone has been excited about AI so far. Some are scared that AI is going to replace humans, while some assume that the impact of AI won’t be very much visible before a decade or so. This is why AI stocks have been low on demand. The broader picture is that many AI-based projects fail due to a lack of in-depth expertise in the subject. It is not performing as predicted, and investors are becoming unsatisfied as a result of this commercial AI weariness. Also, it's possible that the simplest answer is that few people are tech-savvy and believe AI is tough to understand.
However, not all AI firms are functioning poorly. There are a lot of good firms out there that not only have scalable AI but also have made money. Because AI-based equities were not previously available to individual investors, it is today. Many trading startups are built on artificial intelligence. Such technology was only available to hedge fund managers earlier for building and analyzing portfolios but now it is available to consumers like us. The involvement of AI and ML in the direct operations with consumers has attracted many retail investors as this is bridging trust between them and AI. Lately, AI has been capturing the imagination of the investors and well, it should.
Now if we compare India’s AI stocks globally, clearly China ranks 1, the US gets a rank 2, and India… let’s keep talking for now. Although India has a great potential for AI working and investors investing, there are a few concerns. The number one concern being - patent. Due to a lack of infrastructure, inadequate IP protection, and limited resources, India has always struggled with patents. Despite India's increase in AI patent applications since 2012, it is still behind Taiwan, the U.K., Germany, South Korea, and Japan. This is discouraging for investors since the danger has increased once again. India spent only 6% of its IT budget on the cloud, falling behind the global average of 7.9%. India, on the other hand, is bursting with AI potential, ranking among the top ten countries in numerous key metrics.
Pinterest, Taiwan semiconductor, NVIDIA, Amazon, and Microsoft are a few stocks to keep an eye on, according to Kiplinger, given the rising potential of AI stocks performing well. It is not necessary, however, to invest just in AI stocks. There are a plethora of AI-based businesses in which one may invest, all of which have the potential to soar to new heights if the focus is on scalable AI and high-quality data.