--- title: "How to Start Investing in AI as a Beginner" description: "Discover how to start investing in AI as a beginner with our guide. Learn the basics, potential risks, and key factors to consider. Subscribe now!" url: "https://www.mrmoneytv.com/articles/how-to-start-investing-in-ai-as-a-beginner/" category: "Personal Finance" author: "Finlit" published: 2024-08-15 source: "Mr Money TV" --- # How to Start Investing in AI as a Beginner Discover how to start investing in AI as a beginner with our guide. Learn the basics, potential risks, and key factors to consider. Subscribe now! ## Key takeaways - There are two main ways to invest in AI: buy individual stocks from AI leaders (high risk, potential high returns) or use AI-focused ETFs (lower risk through diversification). - Two individual stock examples are Google (Alphabet), which uses AI for search algorithms and autonomous driving, and NVIDIA, known for its AI computing hardware. - For a lower-risk route, two named AI ETFs each hold a basket of AI companies: the Global X Robotics & Artificial Intelligence ETF (BOTZ) and the AI Powered Equity ETF (AIEQ). - Moomoo Malaysia's app has an Industry Chain feature (Markets, then US, then Industry Chain) that breaks down each company's role in the AI ecosystem to help you spot AI companies. - Before buying, evaluate an AI investment on five factors: great tech, scalability, a reliable team, good data, and the right industry. - Know the risks: the AI sector is volatile, startups can fail to achieve their goals, and the technology is complex, needing continuous learning to keep up. With artificial intelligence (AI) transforming everything from healthcare to transportation, it's no surprise it's become one of the hottest topics in investing. Even [Malaysia is actively positioning itself as a leader in AI development and application](https://www.mida.gov.my/unleashing-ais-full-potential-the-next-catalyst-for-digital-growth-2/), with strong support from global tech giants. But if you’re a beginner interested in AI, trying to cut through the noise and tech jargon can be pretty overwhelming. You can skip the computer science degree, because today, we’ll break down the basics of how you can invest in AI and what you should know before investing in AI. Let’s dive in. ## Benefits of Investing in AI Investing in AI offers several advantages to investors. The rapidly expanding AI market presents substantial opportunities for growth, while diversifying your portfolio with AI investments can help mitigate risk. Additionally, successful AI companies have the potential to generate significant returns, making it an attractive prospect for those seeking high-reward investments. ## Considerations when Investing in AI There are several key factors to keep in mind when investing in AI. The AI sector can be volatile, with stock prices subject to significant fluctuations based on technological advancements and market sentiment. As with any investment, there's an inherent risk involved; AI companies, especially startups, might fail to achieve their goals, leading to potential losses. Additionally, understanding AI technology and its applications can be complex, requiring continuous learning to stay updated with the latest developments. ## Methods of Investing in AI ### Option 1: Buying Individual Stocks from Leaders in AI technology Investing in stocks can be considerably high risk but if you’ve got a high risk appetite, you can consider buying individual stocks for potential high returns.  Investing directly in well-known AI companies is one way to expose your portfolio to AI. There are plenty of options to choose from, including, Google ([Alphabet](https://finance.yahoo.com/quote/GOOG/)), which uses AI for search algorithms and autonomous driving; and NVIDIA, known for its AI computing hardware. [Moomoo Malaysia’s app](https://tinyurl.com/flmm24) has a feature, the Industry Chain, that gives you a big-picture view of a specific industry. The Industry Chain feature  helps you identify companies within the AI industry and get a comprehensive breakdown of each company’s role in the AI ecosystem. To access the Industry Chain feature, go to **Markets -> US -> Industry Chain.**  ### Option 2:** [**AI**](http://2.AI)**\-Exposure through ETFs Alternatively, you can opt for ETFs as a lower-risk option to invest in AI. ETFs hold a basket of AI-focused companies, offering diversification and potentially lower risk than picking single stocks. ETFs let you buy a group of AI-focused stocks such as the Global X Robotics & Artificial Intelligence ETF ([BOTZ](https://www.globalxetfs.com/funds/botz/)) and the AI Powered Equity ETF ([AIEQ](https://www.marketwatch.com/investing/fund/aieq)). ## Key Factors for Evaluating AI Investments: Before you start investing, there are some key factors to look into when evaluating AI investments. In the case of selecting a good AI to invest in, look for the following: ### 1\. Great Tech: Is the AI system accurate and powerful? Evaluate the AI system's accuracy and performance. Beyond accuracy, you’ll also need to consider the AI’s explainability, that is understanding how the AI makes decisions and whether it can handle unexpected data well. Additionally, you also need to identify its competitive edge, such as whether or not the AI uses a novel approach or offer unique advantages compared to existing solutions. Example: [OpenAI's](https://openai.com/chatgpt/) GPT-3 generates human-like text with high accuracy and provides insights into how it constructs responses, making it a powerful tool with significant competitive advantages in natural language processing. ### 2\. Scalability: Can the company using AI keep expanding?  Next, analyse the market size and growth potential for the AI product. A large and expanding market indicates higher rate of success. Assess the adaptability of the AI solution, adapt to new situations or integrate with existing systems. Example: [Tesla's Autopilot](https://www.tesla.com/support/autopilot) system scales well due to the growing electric vehicle market. Its adaptability allows for integration of new features and improvements, expanding its market reach. ### 3\. Reliable Team: Does the company have a strong AI team? Look for a team with a proven track record of building successful AI systems. Experience within the specific industry the AI targets is a plus, indicating a deep understanding of industry-specific challenges. Domain expertise ensures the team can develop a relevant and impactful solution. Example: [DeepMind](https://deepmind.google/)'s team, which is known for developing AlphaGo and showcases extensive experience and success in AI research, demonstrates strong capabilities in tackling complex problems and pushing AI innovation boundaries. ### 4\. Good Data: Is the data used by the AI reliable and unbiased? Assessing data management in AI companies can be challenging for new investors. While complete transparency might be elusive, you can glean valuable insights by checking company websites and reports for data management policies. Industry news and analyst reports can also reveal potential data breaches or ethical concerns. Look for companies with leadership experience in data privacy or operating in well-regulated industries. ### 5\. Right Industry: Does AI solve a real problem in its field? Research whether the AI solution addresses a genuine problem within its targeted industry. A clear problem-solution fit significantly increases adoption chances and success, as the AI provides tangible benefits and addresses critical industry challenges. Example: [Blue River Technology](https://bluerivertechnology.com/)'s AI-driven agricultural equipment addresses the need for precision weed control in farming, offering a solution that reduces herbicide use and increases crop yields, solving a significant problem for farmers. ## Conclusion Investing in AI offers an exciting opportunity to expose your portfolio to one of the fastest-growing sectors in technology. Hopefully, with our guide, you’ll have a better idea on how to include AI in your investment portfolio. As always, we at [Mr Money TV](https://www.youtube.com/@MrMoneyTV) urge you to do your research or seek professional guidance before making any investment decisions. *Subscribe to our* [*financial newsletter*](https://www.mrmoneytv.com/) *for the latest news, insights, and advice on personal finance, investing, and more. With every email, you’ll gather the confidence and knowledge to make informed decisions to achieve your financial goals.* ## Frequently asked questions ### How can a beginner start investing in AI? There are two main methods. You can buy individual stocks from AI leaders like Google (Alphabet) and NVIDIA, which carry higher risk but potential high returns. Or you can invest through AI-focused ETFs, which hold a basket of AI companies for diversification and lower risk. To spot AI companies, Moomoo Malaysia's app has an Industry Chain feature under Markets, then US, then Industry Chain, showing each company's role in the AI ecosystem. ### Should I buy individual AI stocks or AI ETFs? It comes down to your risk appetite. Buying individual stocks is considerably high risk but offers potential high returns, so it suits investors comfortable with more risk. ETFs are the lower-risk option: they hold a basket of AI-focused companies, giving you diversification and potentially lower risk than picking single stocks. If you are new and cautious, an ETF spreads your exposure across many AI companies in one purchase. ### What are some AI ETFs I can invest in? Two named examples are the Global X Robotics & Artificial Intelligence ETF (BOTZ) and the AI Powered Equity ETF (AIEQ). Both let you buy a group of AI-focused stocks in a single purchase. Because each holds a basket of AI companies, they offer diversification and potentially lower risk than picking single stocks. That makes an ETF a lower-risk way to get AI exposure. ### What should I look for when evaluating an AI investment? Check five factors. Great tech: is the AI accurate, explainable, and does it have a competitive edge? Scalability: can the company keep expanding into a large, growing market? Reliable team: does it have a proven track record and industry expertise? Good data: is the data reliable and unbiased? Right industry: does the AI solve a real problem in its field? ### What are the risks of investing in AI? The AI sector can be volatile, with stock prices swinging on technological advancements and market sentiment. There is also inherent risk: AI companies, especially startups, might fail to achieve their goals and cause losses. The technology is complex too, so understanding AI and its applications takes continuous learning. Mr Money TV urges you to do your research or seek professional guidance before making any investment decisions.