Vantage point: Investing in innovation  

Is artificial intelligence another investment bubble?

  • To understand how the market is reacting to Artifical Intelligence
  • To discover how the technology sector is evolving
  • To understand the challenges of investing in a new sector
CPD
Approx.30min

Many investors talk up their desire to invest in these "picks and shovel" type enterprises, rather than seeking to pick the technology company winners. Indeed, NVidia is an example of such a business.

The challenge of such an approach may be that at the this comparitively early stage of AI's evolution, it may not even be obvious which types of infrastructure will emerge as nescessary.

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In any case, given the risks and the complexity of knowing the winners with certainty, we continue to recommend a diversified and selective approach. The wave of AI has just arrived, and the game, as often happens in investments, will be won in the long term. As

frequently demonstrated by the past, playing the game intelligently seems to be the smartest thing to do, rather than charging headlong at the latest stock that rallies in response to the market deciding its a play on AI.

Giorgio Broggi is a Quantitative Analyst at Moneyfarm

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What does the author believe has "opened the eyes" on many investors to the potential of Artificial Intelligence?

  2. According to the author, how many patent applications relating to AI were published in the decade to 2022?

  3. What is a typical feature of a "hype cycle"?

  4. According to the author, what is the average p/e ratio at whoch the sector sector trades?

  5. According to the author, how much has Microsoft invested in AI since 2019?

  6. According to the author, what factor made many believe that tech stocks were set for a long period of underperformance?

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  • To understand how the market is reacting to Artifical Intelligence
  • To discover how the technology sector is evolving
  • To understand the challenges of investing in a new sector

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