6/18/2023 - Technology and Innovation

Artificial Intelligence and Investment

By Roman Gutierrez

Artificial Intelligence and Investment

The impact of artificial intelligence on the investment world

Artificial intelligence (AI) has arrived to change our lives, companies, businesses, and in the world of investment will be of high impact. This technology and tools will contribute in the near future to many innovations in value markets.

It is a mega trend with enormous potential, which will increasingly be more integrated in cotidianity and our jobs or occupations.

What is Artificial Intelligence?

Artificial Intelligence or AI is defined as the ability of programs and/or machines to present the same capabilities as humans. These capabilities include among others: reasoning, learning, creativity and the ability to plan.

Some authors begin to call this accumulation of changes to 4ta. Industrial Revolution characterized by artificial intelligence systems.

AI in the financial and banking market:

AI will broaden the knowledge that will have Banking and financial signatures on its customers by associating their financial information, their social networks, personal aspects, tastes, preferences, fears, etc. by correlating their financial products and services.

The Deloitte signature defines this model as “sentiment score”. The banks are buying a lot of AI technology and are using the tools to do everything from digitizing customer portfolios to detect possible deadly.

AI in the stock market and in the investment process: Today, one can create an automatic process that monitors hundreds of investment strategies regularly. Companies like JPM declare that they are making great investments and advancements in these solutions.

The CEO of the Kavout subscription, Alex Lu comments: “Financial intelligence in the context of the purse serves to build better and more personalized investment portfolios, products and financial services.”

“When Wall Street realized the power to use artificial intelligence in the context of “big data” I do not doubt to apply it, due to the advantages over traditional statistical systems, with this beginning in the financial market the term “deep learning” which is less than 5 years and has been improved correlatively by Microsoft, Google, IBM, Goldman Sachs”. In 2017 already 26% of investment management companies used artificial intelligence systems.

AI uses methods that solve mathematical problems by sending orders to purchase and sell actions based on established parameters.

In the New York Stock Exchange more than 70% of operations are performed computerically by algorithms and artificial intelligence. In the Mexican Stock Exchange it is estimated that this number reaches 30% this year 2023.

A recent study published by the UK Research Firm Coalition stated that 45% of the profits by "trading" are obtained by artificial intelligence systems.

How to invest in Artificial Intelligence?

According to analysts, and institutional investors, thematic investment in artificial intelligence is a great long-term opportunity, as it has the potential to transform entire industries (from production to consumption and services).

There are different ways to invest in companies related to artificial intelligence. The most common ways to invest are through:

1- Technology actions linked to AI.

2- ETFs and common investment funds.

Some of the largest companies on Wall Street that are developing solutions and use AI are: Apple, Nvidia, Alibaba, Oracle, Microsoft, Amazon, Google, AMD, ASML, Meta platforms, among others.

Recently, Nvidia Corp. At the heart of the “obsession” by Wall Street artificial intelligence, it surpassed $1 billion in market capitalization on Wall Street.

Cathie Wood recently said in Bloomberg that his funds are looking for software companies, which are "where was Nvidia when we first bought it". The AI actions for the next positions to take, in his opinion would be companies such as Palantir Technologies Inc. and UiPath.

In China Alibaba and Baidu are pioneers, the latter said it will soon release a new version of the AI model that drives its ChatGPT style service. It also created a $140 billion fund to support new AI generation companies in China.

There are also investment funds to invest in artificial intelligence, among some of which are: Allianz Global Artificial Intelligence; DWS Artificial Intelligence; Polar Capital Automation & Artificial Intelligence.

In Spain, for example, Santander AM uses artificial intelligence to conform the portfolios of some of its investment funds, such as Santander PB Strategic Allocation and Santander Multi Asset Low Volatility.

ETFs to invest in artificial intelligence:

Among the stock baskets listed in Scholarships that invest in technological companies linked to robotics, date automation and artificial intelligence, and their yields to date in 2023 are:

BOTZ (+37% YTD); IRBO (+25% YTD), BLOK (+36% YTD), GTEK (+ 20% YTD)

Conclusion: The true potential of AI is to be support tools and high-value inputs added to the management teams, managers and management of funds and banks. Allowing them to make more timely decisions and build better financial and investment strategies. Whereas a machine which is not capable of emotional bias, or emotional decisions.

In addition, the AI contribution to business productivity in all areas of the economy will be remarkable.

Roman Gutierrez

Wealth Management Specialist/ Portfolio Manager

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roman gutierrez

Roman Gutierrez

I help people organize their personal finances and investments. I am passionate about entrepreneurship and stock markets. I have 26 years of experience in the Professional Investment Administration. I am a Venezuelan consultant based in Buenos Aires.

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