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Open AI revenue growth highlights the case for AI investment


Microsoft-backed OpenAI made the headlines this week after the Financial Times reported that the company’s revenue reached $2 billion in December. Open AI also reportedly said that it can more than double this figure in 2025 based on strong interest from business customers looking to use its technology to adopt generative AI tools in the workplace.

Depending on where you sit regarding the use of AI in everyday life and its capacity to make decisions on the user’s behalf, this may be good news, or not.

Open AI highlights the explosive spread of AI in our daily lives

In a separate piece of news Open AI also said that it is working on a type of software that can handle web-based tasks such as gathering public data about a set of companies, creating itineraries or booking flight tickets, and that to perform those it will take over users’ computers.

The so-called agent software promises to perform more complex personal and work tasks when commanded to by a human, without needing close supervision.

Depending on where you sit regarding of the use of AI in everyday life and its capacity to make decisions on the user’s behalf this may be good news or not. But both issues highlight the explosive spread of AI in our daily lives, be it in the workplace or at home, making it one of the most interesting areas of growth investment.

Where to invest in artificial intelligence?

Open AI is not a publicly listed company (in fact it has a convoluted structure which is part non-profit and part for profit). The closest proxy to investing in Open AI is taking a punt on Microsoft [NASDAQ:MSFT], which invested $1 billion in the organization in 2019 and has remained closely involved with the company ever since.

Apart from Open AI there are a whole myriad of companies involved in different levels of AI development. ETF provider WisdomTree groups them into three different categories: enhancers, or companies that provide their own value-added services within the AI ecosystem but where AI is not core to their product; enablers or companies that develop the building block components for artificial intelligence such as advanced machinery, autonomous systems/self-driving vehicles, semiconductors, or databases used for machine learning; and finally engagers, or companies that design artificial intelligence software or systems.

So far, in terms of growth, companies building end-user applications have outshone other players in the AI value chain. In this space the largest tech companies will continue to have a significant advantage over smaller players because of the cost and complexity of development and delivery required to make generative AI available to the widest range of users.

“The time, cost, and expertise associated with delivering them (generative AI) give rise to significant headwinds for new entrants and small companies across much of the value chain. While pockets of value exist throughout, our research suggests that many areas will continue to be dominated by tech giants and incumbents for the foreseeable future,” says McKinsey’s recent report on the topic.

This leaves us with a handful of the biggest players such as Alphabet [NASDAQ:GOOGL], NVIDIA [NASDAQ:NVDA] and Meta [NASDAQ:META], which have delivered reliable growth in the past.

There is also Palantir Technologies [NYSE:PLTR], a major US IT service provider that specializes in software platforms for big data analytics, UK cybersecurity company Darktrace [LON:DARK] and the largest US CRM provider Salesforce [NYSE:CRM].

There is no doubt that AI is only getting started. The next few years will bring developments and changes which we still can’t fully forecast but are set to permeate into every segment of our lives.

Related WisdomTree ETFs

Product Name Exchange Ticker Listing Currency
WisdomTree Artificial Intelligence
Hargreaves Lansdown | Interactive Investor AJ Bell Youinvest | Charles Stanley Direct | EQi

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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