Guide to Investing in AI Stocks in India

Do you recall Iron Man’s JARVIS? The incredibly intelligent AI that saved the day for Tony Stark? AI is rapidly becoming a reality and is no longer merely a sci-fi dream. Imagine a day in the future when, like JARVIS, AI not only knows the answers to our questions but also predicts our wants. And you know what? Don’t underestimate how close this future is!

The AI market is expected to grow from $184 billion in 2024 to a staggering $827 billion by 2030, according to Statista.

AI is emerging as one of the most promising investment opportunities, much like renewable energy. So, how can you take advantage of this trend and buy AI stocks, particularly in India? Let’s investigate.

First, let’s clarify what AI stocks are.

Artificial Intelligence Stocks: What Are They?

Shares of businesses operating in the field of artificial intelligence (AI) are known as AI stocks. This could entail creating hardware that is optimized for AI procedures, creating AI software, or offering AI-based services. Computer vision, generative AI, machine learning, and natural language processing are important AI technologies.

Even while a lot of businesses say they are in the AI space, not all of them are actually involved. While some are merely capitalizing on the hype, others are actually spearheading AI advancement.

Let’s investigate the best way to locate AI investments in India.

An overview of the top AI stocks in India based on performance

Data as of Sept 12, 2024.

Looking to Invest in AI in India

It’s not as hard as you may assume to find AI investments in India. To begin your investigation, a quick internet search will yield a number of articles detailing AI stocks.

In India, a few of the often discussed AI stocks are:

• TCS, Infosys, Wipro, Tech Mahindra, and HCL Technologies are major IT players.
• Affle India, Datamatics, Saksoft, and Kellton Tech Solutions are smaller, specialized firms.
• Persistant Systems, Tata Elxsi, BOSCH, and L&T Technology Services are some of the other top AI stocks.

Even though big IT firms can afford to spend a lot of money on AI advancements, they might not instantly see a noticeable increase in revenue from AI.

Conversely, smaller, AI-focused businesses like Saksoft and Datamatics may have greater room for expansion, but they also carry greater risk because of market instability. Consider Kellton Tech as an example. Kellton Tech provides services in AI and ML in addition to its other business sectors.

The three-year profit increase for Kellton is negative. It has a very low ROE. At the moment, it is losing money.

Therefore, it might not be a good corporation to wager on.

This implies that not every AI-related business is worthwhile to invest in. Therefore, don’t get excited just because a business is using artificial intelligence.

While it does seem to be in less than ideal shape right now, we are not claiming that Kellton is a bad company in and of itself or that it cannot turn around. Digging deeper and not relying solely on appearances is the objective.

Examine their annual reports and financials before thinking about investing in AI in India, regardless of your preference for placing bets on well-known companies or looking into opportunities with smaller, more specialized businesses.

Things to Take Into Account Before Purchasing Artificial Intelligence Indian stocks

• The AI strategy of the company: Verify whether the business has a sound AI plan. In annual reports, investor presentations, and other formal papers, look for references to artificial intelligence.
• Financial Well-Being Assessment: Examine the company’s financials, including return on equity (ROE), debt levels, profit margins, and sales growth. Seek out businesses with low debt, robust profit margins, and consistent sales growth.
• Position in the Market: Recognize the company’s competitive edge and market position. Does it lead the way in AI development, or does it lag behind its rivals?
• Investment Diversification: Take into account spreading your money among both major and minor AI companies. You can then weigh the possible dangers and benefits.

The Best Way to Invest in Indian AI Stocks

Exchange-traded funds (ETFs) that follow the performance of leading IT companies are among the most effective ways to get exposure to AI in India.

Consider the Nippon India ETF Nifty IT, which comprises well-known IT firms like TCS, Infosys, and Wipro, all of whom are improving their AI capabilities.

But keep in mind that AI still accounts for a small portion of their earnings, so it may take some time until these businesses fully utilize AI.

As an alternative, you may invest in smaller businesses like Datamatics or Saksoft that are directly involved in AI development, getting right to the source. Although some businesses have demonstrated encouraging growth, investing in them necessitates careful risk management and in-depth study due to the increased risks involved.

There are several avenues to pursue in the realm of AI investing, regardless of whether you want to follow the big boys or stick with the upstarts.

Benefits of Purchasing AI Stocks

• High Growth Potential: Since AI is still in its infancy, there is a lot of space for expansion as the technology develops and more businesses use it.
• Numerous Uses: AI is causing a stir in a variety of industries, from retail and logistics to healthcare and finance, creating numerous development prospects.
• Early Market Entry: You can profit from upcoming technology developments by making an early investment in AI stocks.
• Strategic Acquisitions: Large corporations may buy out smaller AI-focused businesses, which could result in significant profits for stockholders.

Which Ten Stages Indicate the Future Potential of AI?

AI is not a single entity; rather, it develops in phases, each of which denotes a higher degree of intellect and potential.
A brief overview of the ten phases of AI is provided below:

• Rule-Based AI: The simplest type, which operates according to straightforward, preset rules, like your microwave or alarm clock.
• Context-Based AI: More intelligent algorithms that consider context while making choices. similar to Alexa, Siri, or those tailored suggestions on Amazon.
• AI that focuses on particular activities: such as stock market trading algorithms that examine enormous volumes of data, is known as narrow-domain AI.
• Reasoning AI: AI that can reason through difficult issues and come to logical conclusions, such as ChatGPT or self-driving cars.
• Your very own JARVIS: is an example of artificial general intelligence (AGI), which is AI that functions hundreds of times quicker than humans while matching human cognitive capacities.
• Super Intelligent AI: Theoretically, AI will eventually outsmart humans in every way.
• self-aware AI: AI that develops consciousness, self-awareness, and the capacity to comprehend its own existence is known as self-aware AI.
• Transcendent AI: is AI that is more creative and capable of solving problems than humans.
• cosmic AI: AI with the capacity to engage with or control cosmic-level phenomena is known as cosmic AI.
• God-like AI: The pinnacle of AI development, where it may eventually achieve omnipotence—the stuff of science fiction.

The majority of AI investments are currently in the first three stages, but new developments may get us closer to AGI or even beyond.

Concluding

One excellent strategy to capitalize on the explosive expansion of this game-changing technology is to invest in AI stocks. But keep in mind that AI has a lot of risks in addition to its amazing potential.

Before making any investment selections, it is essential to conduct extensive research, diversify, and have a comprehensive grasp of the company’s AI strategy. Making the most of this AI revolution will depend on remaining knowledgeable and flexible as it develops.