How to Invest in AI in 2025: The Best Ways

The power of Artificial Intelligence (AI) is already changing every industry, from medical, financial to technology and retail. Artificial Intelligence — which was more than $300 billion in 2023 — is predicted to expand exponentially, making investments for investors. In this article, we’ll see how to invest in AI in more detail, how to calculate risks, and who are the best AI companies. 

Risks of Investing in AI  

Investing in AI represents enormous upside but it also carries a portfolio of risk investors must control. In this article, we cover the top risks in AI. 

How to invest in AI: A Step By Step guide

Investing in AI is a blast. But go in with an idea and know how to go about it. This is a full-blown description of how to get started and how to invest in AI successfully: 

1. Set Your Investment Goals  

Be realistic before you put money down. 

• Earn a quick buck: For a quick buck try owning a historical company stock (such as NVIDIA or Alphabet). 
• Expressed Long Term Growth: If you’re in for the long term AI future, an ETF or startup stock could provide exponential growth. 
• Hypocrisy: How naive are you. The startup and the small AI companies are both more perilous and potentially profitable than the larger players. 

2. Choose the Right Investment Way  

There are several investment types of AI available, catering to different types of investors. 

• AI Stocks: Perfect for a first-hand look at the AI top performers. Get Microsoft, Amazon or Meta shares on Robinhood or E*TRADE. 
• AI ETFs: ETFs like Global X Robotics & Artificial Intelligence ETF offer a general portfolio which can be used by a beginner investor. 
• Start-ups: Get started with AI start-ups via SeedInvest or AngelList. 

Managed Funds & Hedge Funds: Managed funds trade in AI related industries and are for passive investors. 

3. Research the AI Market  

You have to know the AI industry. 

• Keep Up To Date: Stay updated with AI technologies such as generative AI, robots and driverless cars to look for investment. 
• Compare Firms: Choose firms with good finances, big R&D budget, AI technology. Examine quarterly revenues, market shares, growth prospects. 
• Not Use ‘Em: Morningstar or Yahoo Finance are complete sources of data that will make your life a lot simpler. 

4. Select a Reliable Investment Platform  

Choosing the platform you will depend on what type of investment you want to make. 

• Stocks & ETFs: The stock brokers, like TD Ameritrade, Fidelity, Charles Schwab are at your fingertips. 
• For Start-Ups: Find early stage AI companies on crowdfunding sites like SeedInvest or AngelList. 
• For Managed Funds: Talk to your Financial Advisor about MFs or Hedge Funds that have investments in AI companies. 

5. Diversify Your Portfolio  

Risk is reduced, but return is improved with diversification. 

• Replenishing Your Investments: Split money between different areas of AI, such as software, hardware, and services. 
• AI With Other Sectors: Pair your AI investments with more traditional industries like healthcare, real estate, or consumer goods for a balanced portfolio. 
• Always Be Local: AI is a global company. Consider foreign AI stocks, mainly in Europe and Asia where the innovation is happening. 

6. Start Small & Scale Gradually  

• Small and Low: If you’re just getting into investing, start small and low so you can be less exposed to risk. 
• Reinvest Earnings: Upon return, go invest in new AI projects to add to your account. 
• Lesson from the Pitfall: Learn from your first investment to refine your strategy. 

7. Monitor and Adjust Your Investments  

The AI market evolves all the time and you need to stay on top of your investments. 

• Track Performance: Follow your portfolio on Yahoo Finance or Robinhood. 
• Respond to the Industry Changes: Stay updated on the industry trends, such as new AI laws or emerging technology and adapt your approach accordingly. 
• Check Once A Year: Check your investment goals and portfolio once a year to make sure they align with your objectives. 

8. Seek Professional Advice  

Talk to a financial advisor if you aren’t sure where to begin. 

• Customized Services: Your investment plan can be customized by your advisor as per your risk tolerance and investment goals. 
• Private Access: Advisors have a window into a hedge fund or private equity that non-advisors cannot. 

That’s all there is to getting into AI and being successful in this burgeoning field. Whether you’re looking for the security of ETFs or the high-risk, high-reward of startups, if you’re in the know, you’ll be able to get the most for your investment dollars. 

How to invest in AI: Top Ways 

AI ETFs  

AI-specific ETFs provide broad exposure to the AI space. Popular ETFs include:  

• Global X Robotics & Artificial Intelligence ETF: Robotics and AI companies. 
• ARK Autonomous Technology & Robotics ETF: Funds pioneers in the automation revolution. 

Startups & Venture Capital  

If you’re wondering how to invest in AI, consider venture capital funds as a good investment way for investing in AI startups. The portals, such as SeedInvest or AngelList, allow you to connect with early-stage startups. 

• Positives: Exponential growth potential. 
• Contingencies: Low startup failure rate. 

AI-Driven Funds  

Professional investors oversee hedge funds and mutual funds that invest in AI technologies. These funds typically invest in firms that create AI hardware, software, and services. This can be useful for those who are interested in how to invest in AI.

Building Your Own AI Projects  

Building AI-related tools or apps is a lucrative investment for tech-savvy users or entrepreneurs. So if you are thinking about how to invest in AI, the ability to develop your own AI product for specialized markets can be extremely lucrative. 

AI Stocks  

IPO: How To Invest In AI Stocks

• NVIDIA Corporation (NVDA)

NVIDIA GPUs are the key to training and deploying AI models and it’s one of the leaders in AI hardware. AI innovation is one of the company’s key priorities for investors.

• Microsoft Corporation (MSFT)

Microsoft embeds AI into its Azure cloud, productivity tools, and collaboration suites. Its multi-billion-dollar investment in OpenAI reflects its dedication to AI technology development.

• Alphabet Inc. (GOOGL)

The parent company of Google has already paved the way for AI research with initiatives such as Waymo for driverless cars and AI-driven search. Good option for those who are seeking how to invest in AI and eliminate risks.

• Amazon.com Inc. (AMZN)

Amazon uses AI for AI-based shopping, logistics, and AWS cloud computing.

• Meta Platforms Inc. (META)

Meta uses AI to manage content, VR, and the metaverse, and is thus an innovator in social and virtual technologies.

How to Invest in AI Startups

Investing in start-up AI firms can provide distinctive growth opportunities, particularly for smaller investors. Here is a shortlist of some less known AI companies, each providing a summary and relevant links for further study for those who want to know how to Invest in AI:

• C3.ai (Ticker: AI)

C3.ai is an enterprise AI software provider, offering cloud-based solutions that enable organizations to build and run AI applications. If you want to know how to invest in AI, they offer great investment opportunities.  With more companies adopting AI services, C3.ai’s solutions suggest the chance to scale.

• SoundHound AI (Ticker: SOUN)

For those looking to learn how to invest in AI that specializes in AI voice solutions and conversational intelligence, SoundHound AI is a great fit. They are also checking out the automotive and consumer electronics sectors. Voice-enabled devices are taking off, and SoundHound AI’s technology is gaining popularity.

• BigBear.ai (Ticker: BBAI)

BigBear.ai delivers AI-based analytics and cyber engineering solutions primarily to the U.S. defense and intelligence markets. How to invest in AI and reap the benefits? Invest in BigBear. Because the business is focused on government contracts, the company generates a predictable income.

• Mitek Systems (Ticker: MITK)

Mitek Systems is an AI-powered digital identity verification and mobile capture solutions provider focused on ensuring the security and user experience. As the number of digital transactions goes up, so does the need for robust verification tools. To understand how to invest in AI Mitek Systems – visit their website

• Lantronix (Ticker: LTRX)

Lantronix secures data access and management for IoT/Right-of-way environments and implements AI for optimal business. The rise of IoT devices offers opportunities for Lantronix’s AI-based solutions.

• Innodatatics (Ticker: INOD)

Innodatatics offer AI and data analytics services aimed at helping organizations in various industries convert their data into useful insights. With a rising demand for data-based decisions, Innodatatics is poised for expansion.

How to Invest in AI and Grow Over Time

The investment in Artificial Intelligence companies can yield handsome returns, although it’s worth noting that most new AI startups aren’t yet yielding a dividend. Rather, dividends typically yield rewards via rising stock prices. Figures shown below provide simulated returns for various investment sizes and annual growth rates over a five-year period.

Assumptions:

• Annual Growth Rate: Is the annual percentage growth of the investment, in terms of stock price.
• Compounding: Based on an assumption that returns are reinvested each year.

How to Invest in AI: The Biggest Things to Consider

1. Market Volatility

Artificial intelligence is a competitive and evolving space that is volatile in nature.

• Stock Price Volatility: A company that heavily relies on AI might experience big jumps in stock price as a result of news, earnings reports or new competitors.
• Hype vs. Fact: Artificial intelligence stocks are prone to speculative trading, which means that the anticipation of innovation can pump up shares, resulting in a bubble that then collapses if expectations are not met. Remember about that if you want to understand how to invest in AI effectively.
• Economic Sensitivity: Longer term economic cycles can have a greater impact on tech and AI firms as businesses are known to cut back on innovation during a downturn.

2. Technological Uncertainty

AI technology is changing fast, and what works today might become obsolete tomorrow.

• Changers: Competition from outsiders or disruptive technologies can overtake the incumbents thereby depleting share prices and depressing stock performance.
• Buzzwords: Some AI uses such as driving robots or cars, however, struggle with technical and scaling issues that delay ROI.
• R&D based dependence: When an organization spends so much money on research and development, it will burn funds and not have the promise of a good product thereby leaving it financially unstable.

3. Ethical & Regulatory Challenges

If you’re learning how to invest in AI, you should remember that artificial intelligence is morally problematic, and regulators around the world are getting increasingly more vigilant.

• Data Privacy: Most AI systems consume a lot of personal information. Data breaches and data privacy violations result in lawsuits, penalties and consumer distrust.
• Bias and Discrimination: AI systems can enact biases without knowing that they will do so, and cause public backlash or prosecution.
• Regulatory Reform: Governments can regulate AI technologies, like driverless cars or facial recognition, to curtail growth or raise the cost of compliance.

4. High Competition & Market Saturation

The AI space is crowded, and incumbent tech giants and startups are competing for supremacy.

• Big Players vs. Startups: Large companies, such as Google, Amazon and Microsoft usually dominate the market and small players have very little room to innovate.
• High Failure Risk: AI startups often fail due to lack of funding, technical problems or lack of market demand.
• Market Saturation: With more AI companies emerging, there may be fewer unique growth-capable opportunities.

5. High Capital Requirements

AI businesses require significant investment to fund research, build technology, and stay competitive. Keep this in mind when researching companies and figuring out how to invest in AI.

• Burn Rate: Most AI startups burn a lot of cash, which can leave them dependent on regular funding rounds.
• High-Income Infrastructure: AI requires high-end hardware, such as GPUs, storage and cloud services, which puts financial strain on budgets.

6. Global Geopolitical Risks

Artificial intelligence is one of the main geopolitical conflicts — in particular between the US and China.

• Export Importing Limits: Governments can ban the export of high-end AI solutions and that may limit companies around the world.
• Security Risks: AI companies are easy prey for attacks that disrupt operations or defraud intellectual property.
• Economic Sanctions: Trade wars or sanctions can sever supply chains and cut off access for global AI companies.

7. Uncertain ROI

It might be good AI but we don’t know when we will start reaping the rewards.

• Long Runs: Some AI technologies, like quantum computers or specialized robots, take years or decades to get in the market.
• Market Overestimation: Estimates of the impact of AI are always unrealistic and can lead to overestimating.
• Scalability: Even the best AI models may not scale because a technical or market limitation renders them non-profitable.

How to Mitigate These Risks

• Diversification: Diversify across different AI firms, industries, and geographies to avoid one risk at a time.
• Research: Take a careful look at the financial position, technology lead, and competitive position of the companies before investing.
• Pay Attention to Big Boys: While startups can be incredibly explosive, big players such as NVIDIA and Microsoft are generally stable.
• Stay on Top of the Game: Follow the industry, regulatory, and technological developments to adjust your approach as needed.

Understanding these risks can enable investors to make informed decisions and better deal with the challenges associated with putting money into AI and taking advantage of its opportunities.

AI Investing Demystified  

Should I Invest in AI? ETFs are risk-free starting point, of course. 

So which are the AI stocks that should you buy? NVIDIA, Alphabet, Microsoft: strong bets.  

How much AI am I going to pay for in the first place? Start out with losses you’re used to, especially on a hot market. 

Are you taking a gamble with AI? Yes, all investments carry risks.  Learn and diversify so you don’t lose any more. 

AI ETFs which are the best? Consider steady growth and diversification.  

FAQs

How to Invest in Quantum AI?

If you want to put your money into quantum AI, here are the steps:

• Public Company: Buy stocks of IBM, Alphabet (Google) or Rigetti Computing, who are pioneering quantum AI.
• Start-ups: Search for crowdfunding sites such as AngelList or venture capital funds for quantum computing startups.
• ETFs: Seek technology ETFs with quantum computing and AI companies to get diverse exposure.
• Collaborations in Research: Track joint projects between quantum and AI companies for indirect investments.

How to Invest in Figure AI?

To spend on Figure AI – robotics and AI-oriented company:

• Direct Investments: As a private company, you might have to go to VC funds or angel investors for access.
• IPO Alerts: Watch for press releases of a public listing, and this is where you’d buy shares.
• Connections to Industry: Invest in the companies Figure AI partners with or supplies in the value chain.

How to Invest in OpenAI?

OpenAI is a private company, so direct investments are not yet available. And this is how you can get noticed:

• Direct Investments: Microsoft is an early investor in OpenAI, if you invest in Microsoft shares you indirectly invest in OpenAI projects.
• Future Perspectives: Follow OpenAI’s IPO or funding round announcements.
• Ecosystem Investment: Invest in OpenAI-powered businesses, like ChatGPT APIs-based AI startups.

How to Invest in Elon Musk’s AI Company?

There are multiple investment avenues in Musk’s AI projects, from Tesla to Neuralink to xAI:

• Tesla (TSLA): Invest in Tesla shares for exposure to its AI and driverless car initiatives.
• Neuralink: Neuralink is a private company; VC or PE funds might offer indirect investments.
• xAI: xAI is currently private. Check back for news on public funding or partnerships.
• Co-Operating Companies: Buy into companies that sell or collaborate with these Musk led AI companies.

AI investment is an exit ticket into a paradigm changing enterprise. You can be set to succeed in this dynamic environment if you are familiar with the market, your options and taking risk. Ready to invest?  Start exploring your options today!