AI has been one of the buzzwords (letters?) of the past year. Tech companies, eager to prove they’re the best in the game, are racing to get ahead of each other with the latest software and advanced strategies. It’s clear that however controversial Artificial Intelligence might be, it is here for good.

 

Analyze piles of data in a snap. Write and design content with a click. Automate processes. Companies have already witnessed the increased efficiency AI can provide. At the same time, we can’t ignore that AI will lead to job displacement: analysts predict it will affect almost 40% of global jobs. My own job as an Investment Advisor is at the top of the list, but luckily AI can’t replicate my sparkling personality.

 

All jokes aside, that’s part of what it comes down to in the end – Artificial Intelligence can’t replace the human factor: the relationships that have been built, the years of trust behind them, and good old intuition.

 

The stock market has been impacted greatly by AI companies and more specifically, the ‘Magnificent 7’ tech companies. It’s a bit unnerving to think about how seven stocks deliver 28% of the S&P 500’s performance, which leads us straight to one of our most asked questions these days: how do I tap the upside of AI stocks in the market?

 

Many investors are looking for the next big name in AI, but picking the right name is nearly impossible and can be extremely risky. It’s easy to get caught up in how much profit can come from investing in a specific tech company, but it’s also important not to fall prey to ‘big market delusion.’ Overconfidence in a dominant company in the early stages of a new technology can lead to downfalls, especially if that dominant company is replaced by new players. Investors also might want to be wary of the promise that the transformation by the new technology will happen fast.

 

There’s no doubt that AI will be transformative; just keep in mind that it might not happen as quickly as expected, and the companies that are dominant today might not be dominant in five to ten years (or even two). I recommend sticking to well-known, established, and experienced tech brands with strong AI arms. For even better diversity, invest in a strategy that has a basket of these companies in the portfolio. Embracing such diversity is a safer bet; it's how our team has been approaching AI while minimizing risk.

 

Artificial Intelligence will continue to evolve and broaden its impact on our world. Here’s hoping the good will greatly outweigh the bad.

 

- Monica Mazun

Associate Investment Advisor