In recent years, global investment in artificial intelligence (AI) has surged from $12.75 million in 2015 to $93.5 billion in 2020. AI has become an important factor in the development of automated software and machine learning, creating a myriad of opportunities for investors and software developers alike. However, there are also risks associated with investing in AI software, so investors must take the time to understand the market and the potential rewards and pitfalls of investing in AI software.
One of the key questions that investors must ask themselves when considering investing in AI software is: What's the better investment - a diversified AMD or an AI software-focused Nvidia? AMD and Nvidia are both large companies that produce computer hardware, with Nvidia specializing in AI-focused software and AMD offering a more diversified range of products. By understanding the differences between the two companies and their respective strengths and weaknesses, investors can make a more informed decision as to which company offers the best opportunity for short-term and long-term returns.
In addition to considering the differences between AMD and Nvidia, investors must also consider the potential for growth in the AI software market. According to a report from MarketsandMarkets, the AI software market is projected to grow from $9.5 billion in 2018 to $59.8 billion by 2023, with the Middle East expected to dominate the market due to its focus on investment in self-driven cars. This growth in the AI software market offers potential investment opportunities for those willing to take a risk on the emerging technology.
Another factor to consider when investing in AI software is the potential cost of investing in the technology. While the cost of investing in established AI software companies can be quite high, there are a number of newer companies offering AI software solutions at a much lower cost. This allows companies to get the benefits of AI and data analytics with a smaller initial investment, and they can also customize the software to meet their specific needs.
Despite the potential for growth and cost savings associated with investing in AI software, there are still risks associated with the technology. For example, cloud software stocks were among the victims of today's sell-off, with a weak report from chipmaker Micron and stronger-than-expected economic data causing a sell-off in the sector. This highlights the potential risks associated with investing in AI software, as even established companies can be affected by market conditions.
When looking to invest in AI software, investors should also consider the potential for long-term returns. Companies such as Alphabet, Microsoft, and Apple have been investing heavily in AI software, and their investment are beginning to pay off. Will Healy of Alphabet, for example, has recently made an investment thesis using GPT-3 software, saying that AI would be a major factor in the future growth of the company. This suggests that there may be potential for long-term returns for investors willing to invest in AI software.
Despite the potential for long-term returns, investors should also consider the potential risks associated with investing in AI software. For example, AI software companies can be slow to adopt new technologies, or may not be able to keep up with changing market conditions. Additionally, AI software is still a relatively new technology, and it may take some time for the technology to be adopted in various industries. As such, investors must be aware of the potential risks associated with investing in AI software before committing any funds.
Finally, investors should be aware of the potential ethical implications of investing in AI software. While AI software can have positive applications, such as automating tedious tasks and providing analysis of large amounts of data, it can also be used to invade privacy or manipulate markets. As such, investors must be aware of the potential ethical implications of investing in AI software before investing in a particular company.
