How to realise AI’s investment potential – without getting caught in the hype

UNLESS you have been living off-grid in recent years, artificial intelligence (AI) will need little introduction. While AI itself is nothing new, the increasing availability of generative AI and large language models (LLMs) to the public, and their first steps into commercialisation over the last year have thrown the sector even further into the spotlight.

The long-term, game-changing potential of AI makes it a clear fit for thematic investing. After all, the latest tools are multi-purpose and easy to use, meaning they could transform a wide variety of activities and industries over the coming decades. However, investing in the sector is not without challenges.

AI adoption has progressed at unprecedented speed, helping to raise the level of hype around AI companies to fever pitch. Furthermore, size matters in AI – larger models display disproportionally greater performance – which means there are a lot of dollars pouring into what is a computing arms race. This is despite – or perhaps because of – the fact that the sector is still at an early stage.