With the advent of the AI era, we are faced with another investment opportunity. Think about the changes brought by the internet boom. Even before companies like Cisco (CSCO), Amazon (AMZN), and Google (GOOG) became prominent, the potential of the internet was limitless. Similarly, while AI is currently led by giants like Nvidia (NVDA), Microsoft (MSFT), and Advanced Micro Devices (AMD), no one knows who the next ‘Nvidia’ will be.
New Investment Opportunities: Four Key Categories
1. Pick and Shovel Makers
To strike gold in the AI era, you need the right tools. Just as those who sold shovels and picks profited during the gold rush, companies laying the foundation for AI are gaining attention. Examples include chip manufacturers, networking hardware producers, and software developers.
Example Companies
- Nvidia (NVDA): A leader in AI chips
- AMD: Developing high-performance AI chips
- Oracle (ORCL): Providing cloud and database solutions
2. Second Chancers
These are companies that have leveraged their existing success to seize new opportunities. Before the internet boom, Apple (AAPL) and Microsoft (MSFT) were already successful, but they revolutionized and revitalized their businesses through the internet. The AI era also features such companies.
Example Companies
- Microsoft: Innovating with a combination of cloud and AI solutions
- Apple: Developing new products and services utilizing AI
3. Trojan Horses
These are companies that are not primarily tech firms but have achieved significant innovation by adopting AI. Companies like Walmart (WMT) and CME Group (CME) that have revolutionized their business models through AI fall into this category.
Example Companies
- Walmart: Innovating logistics and supply chains through AI
- Financial Services Companies: Enhancing data analysis and predictive models with AI
4. New Faces
Just as there are companies that wouldn’t have existed without the internet, there are new companies emerging in the AI era. These are the new AI startups creating innovative business models based on AI technology.
Example Companies
- New AI Startups: Offering innovative solutions across various fields
- New AI divisions within established companies: Examples like Tesla’s (TSLA) xAI
Risks to Consider
While AI investments offer great opportunities, they also carry risks. Remember how many tech stocks surged and then crashed during the internet boom. AI-related stocks can also thrive or disappear. Factors such as regulatory changes, the pace of technological advancement, and geopolitical risks are among these risk factors.
Points to Consider When Investing
- Diversification]: Reduce risk by diversifying across industries and regions.
- Thorough Research]: Conduct thorough research on the financial health, management capabilities, and market prospects of AI companies.
- Long-term Perspective]: AI technology development takes time, so maintain a long-term investment perspective.
Conclusion
Investment opportunities in the AI era hold similar potential to the internet boom. To avoid missing out on the changes brought by new technology, it is important to carefully examine various companies and adopt a diversified investment strategy. Start now. The time to seize new opportunities in the AI era is now.
Reference: Team of Charles Schwab, “Beyond Nvidia: How the AI Picture Could Evolve for Investors”