‘Look beyond Nvidia’: AI investments demand diversification

Investors must “broaden their horizons” and look beyond the big names in artificial intelligence (AI), including famed chipmaker and ‘Magnificent Seven’ member Nvidia, to fully leverage their investments and build long-term wealth, a leading investment analyst has urged.

While Nvidia’s “dominance in AI computing is indisputable” says Nigel Green, chief executive of global financial advisory firm deVere Group, there are also significant investment opportunities in other niche AI hardware and software companies.

“Investing in Nvidia undoubtedly offers exposure to the booming AI market,” Green said. “The company’s stock performance, up 79% this year, reflects market confidence in its ability to deliver cutting-edge AI solutions.

Nvidia ranks as the world’s third-largest company by market cap (after Microsoft and Apple), valued at $2.06 trillion.

“However, to build long-term, sustainable wealth, investors should diversify their AI investments beyond Nvidia and explore opportunities in emerging players and niche segments of the market.”

“Investing in these companies allows investors to capitalise on niche markets and tech advancements that may not be fully captured by industry giants like Nvidia.”

For instance, he notes that, even in a space where Nvidia dominates, there are investment opportunities present amongst niche AI hardware and software development companies in areas not fully captured by industry giants.

“While Nvidia dominates the GPU market, there are niche players focusing on specific aspects of AI computing, such as specialised chips for edge computing or AI-powered algorithms for image recognition,” Green said.

AI investment opportunities are also ripe in start-ups and early-stage companies, which could offer the next breakthrough he said.

By investing in early-stage companies, investors can “gain exposure to disruptive technologies” and “potentially benefit from significant growth as these companies scale,” Green said.

Investors should consider opportunities beyond pure tech industries being transformed by AI – for instance, in healthcare, finance and manufacturing.

“For example, healthcare companies leveraging AI for drug discovery or personalised medicine present compelling investment prospects with long-term growth potential.”

For Green, while Silicon Valley is “synonymous with AI innovation”, investors should be conscious of emerging AI hubs worldwide, “from Tel Aviv to Beijing”.

“Investing in companies operating in these burgeoning AI ecosystems allows investors to tap into global talent pools and diverse markets, diversifying risk and capturing upside potential.”

For fast-emerging technology with significant social implications, ethical considerations also cannot be ignored.

“As AI becomes increasingly pervasive, issues such as data privacy, bias in algorithms, and societal impact are coming under scrutiny,” Green noted.

“Investing in companies with robust ethical frameworks and a commitment to responsible AI development not only mitigates risk but also aligns with investors’ values and long-term sustainability goals.”