Businesses Capitalise on the AI Frenzy

Some companies are focusing on developing AI technology themselves, and others are partnering with startups to incorporate the technology into their business models. The latter approach can result in higher earnings, and thus a higher share price for the company.

One example of this is Nvidia, whose GPU chips power the servers that handle AI-related tasks. The chip maker has enjoyed a surge in sales and revenues as the industry embraces AI-related technologies. In fact, Nvidia has reached the $2 trillion mark in market value, the fastest of any US company.

Other companies are leveraging AI Frenzy to boost productivity and cut costs. Online used-car marketplace Vroom, for example, plans to cut 800 jobs to focus on AI services. It will close its e-commerce and automotive financing divisions to concentrate on its AI services. In the banking sector, Mastercard is “actively engaged” in generative AI research but is careful not to lose sight of what matters: protecting customer data and maintaining financial stability.

How Do Businesses Capitalise on the AI Frenzy?

Despite these successes, not all AI firms are enjoying the same benefits from the current craze. Many are still in the early stages of development, and some have yet to prove their worth to investors. Others are grappling with ethical and legal concerns surrounding the use of generative AI in their products.

As such, the success of the AI frenzy is likely to depend on how quickly the sector can produce a positive return on investment and establish a sound business model. Investors should be cautious of the hype around AI, and focus on investing in companies that can show a clear path to profitability and growth.

Fortunately, there are some promising signs that the AI frenzy could be sustainable in the long run. Tech billionaires such as Steve Cohen and Stan Druckenmiller have jumped on the bandwagon, and investors are looking for viable ways to play the space.

The key to this is to look for companies that are set to utilise AI extensively in their business models. This will ensure they are able to reap the benefits of the new craze and see an increase in their earnings, and therefore their share price. For this reason, UK cybersecurity firm Darktrace’s shares have risen by 20% year to date, and Dutch chipmaker ASML has seen its stock climb this year as the demand for AI-related products continues to grow.

However, this isn’t an opportunity for the average investor to get in on the ground floor. Most of the AI-related companies that are listed on exchanges have yet to post robust earnings, so they may not be a good fit for most investors. One alternative is to invest in a fund that holds the stocks of these companies, such as the Global X AI Fund. This fund has a strong track record of outperforming the market, and provides a safe way to diversify your portfolio into the AI space.