ChatGPT, a chatbot developed by OpenAI, has become a media sensation since its release on November 30, 2022. Experts believe platforms such as ChatGPT will significantly affect productivity, automation, and industry.
In this article, we’ll delve into ways to gain exposure to chatbots such as ChatGPT, including public companies pursuing efforts in the field, tips for choosing a stock broker to buy shares of these companies, and more!
1. What is ChatGPT?
ChatGPT is an artificial intelligence chatbot that can receive inputs from its users both in the form of text (typed questions or comments) and images. It can even analyse whole documents and webpages and deduce information.
2. OpenAI – creators of ChatGPT. Can you invest in OpenAI’s ChatGPT?
ChatGPT was developed by OpenAI LP, an artificial intelligence (AI) research and deployment company. OpenAI is currently not a public company. Hence, individual investors cannot buy their shares on the open market. Once OpenAI conducts an initial public offering (IPO), investors will be able to buy its shares.
It is important to note that OpenAI LP is a “capped-profit company,” as explained by OpenAI:
“The fundamental idea of OpenAI LP is that investors and employees can get a capped return if we succeed at our mission, which allows us to raise investment capital and attract employees with startup-like equity. But any returns beyond that amount—and if we are successful, we expect to generate orders of magnitude more value than we’d owe to people who invest in or work at OpenAI LP—are owned by the original OpenAI Nonprofit entity.”
For the time being, given the inability to buy shares directly, there are other companies active in the field of artificial intelligence chatbots which you may want to consider!
3. Separating the wheat from the chaff
AI is a field undergoing tremendous change. In this dynamic setting, keeping an objective view when assessing investment opportunities in the space is important. Many companies in the field may fail, but the few that do succeed will likely bring tremendous returns to investors!
That said, if investors rush into the AI space without doing the necessary due diligence, they may repeat the mistakes made with the rise of environmental, social, and governance (ESG) investing. Bad practices in the space ended up being called “Greenwashing” – claiming something is ESG just to gain popularity and attract funds without underlying ESG contributions.
In fact, some already refer to bad practices in the AI space as AI washing. The idea is to attract interest in a company because it is doing something related to AI without it being the case.
With this much needed disclaimer out of the way, let’s look at the companies promising to take a slice of the growing AI pie!
Public companies active in AI chatbots
Microsoft (ticker MSFT) is the most straightforward way to get exposure to ChatGPT. The Office developer originally invested in OpenAI in 2019, followed by another capital injection in 2021. Just recently, Microsoft announced it would invest billions in OpenAI over the next few years to accelerate AI breakthroughs.
What’s more, Microsoft’s search engine Bing already incorporates ChatGPT in a new feature called Bing AI. This represents a new way to search online in a chat-like manner, rather than the traditional scrolling through a list of websites. Here is the response we got when asking Bing AI the question, “Will Microsoft benefit from its investment in OpenAI?”:
2. Alphabet (Google)
Alphabet (GOOGL), the parent company behind the search engine Google, currently holds the dominant position in internet search. According to Statista, in January 2023 (before Microsoft incorporated ChatGPT in Bing), Google held 84.69% of the global search market, followed by Bing at 8.85%. Hence Alphabet is very much interested in keeping its prime position in the market and is investing heavily in AI chatbots.
One company Google is increasing its cooperation in the field of AI is Anthropic, and it’s yet-to-be-released to the public assistant Claude. In terms of functionality, Claude should be very similar to ChatGPT.
Alphabet is also working on its iteration of a ChatGPT chatbot called Bard. Bard is still in the testing phase and, once released, should complement Google Search in much the same way ChatGPT works on Microsoft’s Bing.
Alibaba (BABA) recently unveiled its ChatGPT rival named Tongyi Qianwen, meaning “truth from a thousand questions.” The chatbot is set to be integrated into all of Alibaba’s apps in the near future.
Parallel to the move, Alibaba lowered prices on cloud products to speed up innovation in the AI space. Tongyi Qianwen is now available for general enterprise customers and developers in China for beta testing.
4. The countless smaller rivals
While Microsoft, Alphabet, and Alibaba are examples of big, established companies with ready products to test AI chatbots, they also face the greatest disruption by new entrants to the AI scene. Hence currently, it is hard to say who will prevail – will it be the IT success stories of the past, or will new companies send the incumbents into oblivion?
In any case, a prudent approach is to consider smaller upstart companies as well, bearing in mind not to become a victim of AI washing. The key thing to remember is that there is a huge difference between the big companies outlined above and the new entrants. Established companies are already profitable and are mainly looking to protect their revenue stream. Start-ups, on the other hand, are developing a product that may or may not become commercially viable.
How to make the trade (Step-by-step guide)
1. Choose a good broker
Once you are done with the hard part of choosing which AI stock to invest in, you need to find a broker where you can make the purchase. If you go for one of the established IT companies pursuing projects in AI chatbots, you should primarily focus on broker trading commissions. In contrast, if you want to invest in niche players, you may want a broker offering access to more markets around the world.
|Broker||Stock commission, US||Minimum Deposit||Regulators||Market access|
|eToro||$0||$50 (varies between countries)||FCA, CySEC, ASIC||17 countries|
|Interactive Brokers||USD 0.005 per share with a minimum of USD 1.00||€/$/£0||FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB||33 countries|
|DEGIRO||€/£1 (+€/£1 handling fee)||€/£1||DNB and AFM||26 countries|
We recently compared DEGIRO and Interactive Brokers, two of the leading discount brokers available to investors!
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a couple of days as the broker has to verify your identity. After the process is finalized, you must deposit money into your account.
3. Find your stock
The process of finding the stock you want to purchase is really intuitive, as all trading interfaces offer search functionality based on the company name or stock ticker. Keep in mind large companies usually have a dual listing on several exchanges, allowing you to buy their shares in the currency you desire.
4. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your share. All you have to do is place a buy order.
Generally, you should pay attention to:
- Quantity of shares you are purchasing.
- Order type – market type if you want to buy at the best available price at the current point in time, or limit type if you are willing to make the purchase only on a pre-conditioned limit price.
- Order duration – should the order be valid for the day, a set period or good till cancelled (GTC).
The Final Word
After writing this article, we decided to ask ChatGPT the question posed in the title and compare the results:
While ChatGPT didn’t go into the details we outlined above, he did make a valuable contribution. The chatbot suggested that we could go for exchange-traded funds (ETFs) if we are unsure which artificial intelligence company to choose! The main benefit of ETFs is the diversification they offer – you get exposure to dozens of companies, which limits drawdowns in case one of them fails.
Here are some ETFs you may want to consider, again available at some of the brokers outlined above:
- Investo QQQ (ticker QQQ), a broad technology ETF that tracks the NASDAQ 100.
- Global X Robotics & Artificial Intelligence ETF (BOTZ) tracks companies that potentially stand to benefit from increased adoption and utilization of robotics and AI.
- Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) invests in AI companies or companies that will benefit from increased AI adoption.
One last caveat – the above ETFs are not investable by Europeans as they do not meet UCITS requirements of having a local language document (QQQ is available at eToro but as a contract for difference, CFD). Alternatives available to European investors are:
- Lyxor STOXX Europe 600 Technology UCITS ETF – Acc (TNO)
- iShares STOXX Europe 600 Technology UCITS ETF (DE) EUR (Dist) (EXV3)
As always, you can generally choose between Accumulating ETFs, such as TNO above, which do not pay dividends, or Distributing ETFs, such as EXV3 above, which pay a dividend.
The Bottom Line
To sum it up here’s what you need to do:
- Choose an AI stock to buy. Large established companies are already profitable but vulnerable to disruption by newcomers, which in turn run the risk of being unable to commercialize their product. You may even consider an AI ETF.
- Find a suitable stock broker: When it comes to AI shares, as always, you need a broker offering excellent terms on stock trading. Consider the market access of the broker if you are looking for niche companies!
- Open an account and deposit money: After deciding which trading platform to use, you must go through the account opening process and deposit money.
- Send a buy order to your broker for the AI stock you like: That’s the easiest part (the process is intuitive)! After having your brokerage account and the name of the company that you want to buy, you just have to place a trade!
We hope that this post addressed some of your concerns. Make sure to do your research to find out the best investing strategy for you!
Please let us know in the comments if you have any doubts or suggestions.