Are there any stocks on the FTSE 100 or 250 which specialise in the development of AI?
No. There are just an increasing number who claim to be using it. Most of it is BS. AI is a technology that needs to be applied from an application-driven need, not a tech-driven one. Corporations that ignore this - there will be many - will be sinking shareholder’s money into white elephant systems for the sake of a conference call tick.
This search for AI is a bit like when Inkjets came out or 3D printing. It is difficult to invest in a technical idea. If you wanted to invest in Inkjets, you would have to invest in large Japanese companies that make lots of other stuff. You don't just make AI, you decide to invest in AI research to solve a problem. So you could find Shell announcing that they have invested £100m in AI to help with reducing carbon emissions. I think the only people just developing AI are universities, and even they do it to help with other research. But at the moment I still think it's more a BUZZ word than something to invest in.
There will be huge winners out of AI picking them is LIKE throwing darts at a board in the dark
Longer term technology trusts are probably the way to gain exposure to this area such as Polar Capital Technology Trust (LON:PCT)
agree with other posters here, I would see this a bit like the dot com bubble. There will be hundreds of POS companies that put AI in their name, mention AI in their updates but just don't have a real business at all. A speculative bubble which could run for a few years (look at history of dot com) or could pop tomorrow. There will be big winners (think Amazon from dot com days) and lots and lots of losers, you will not be able to easily decipher the wheat from the chaff. The big winners will be discarded with the losers (like Amazon was) and recover, whilst the losers disappear. If you are nimble, you could catch some of the moves or you could try and invest in an ETF (e.g. RBOT or BOTZ) ... looking at the holdings, most are large cap and NVDA is the largest in both of them...I personally think NVDA is massively overvalued (P/E of 200 odd and PEG of 11 or 12) so if/when the bubble pops, its likely the ETF's will fall a fair way too
Nvidia’s year end is 31 January, so the 2023 figure is historical. The forward pe is around 50x, expensive for a semi stock, but par for the course for an IP-rich tech stock with a growth profile over 20% pa. I wouldn’t buy in at these levels, but I wouldn’t sell if I held.
Think the point in my original post is missed by the comment on NVDA. NVDA is a quality company, no doubt about that but as I said in the first post, I personally see it as overvalued (others will disagree and thats what makes a market, but I also would not short it - if I was holding it, I'd probably keep holding until there was technical signs of the move being over but I would not be buying it here either).
My original point is that many companies are mentioning AI repeatedly in their earnings updates or have it in their ticker names etc just to jockey their share price while others will have genuine business models to exploit the technology. You may not necessarily be able to decipher the wheat from the chaff. If you are nimble, you can profit on the moves but be prepared to exit if it is a bubble and pops. I also suggested if you want exposure there is always the ETF route (but ETF's will follow any large declines too)
A warning about AI, "A number of U.S. big tech companies
fell on Wednesday as Microsoft's results signaled how the
high-stakes battle for AI supremacy will cost the tech giants
that have seen their shares rally in recent months on hype
around the technology."
Maybe this will dampen down AI, it is going to cost a lot money to develope. Can't see small UK companies developing it.
