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Many companies are competing to dominate the artificial intelligence (ai) race. However, you could buy just one. FTSE Actions that could help me generate wealth from all of them!
The action in question is Baillie Gifford US Growth Trust (LSE: USA). I'm looking for the best ways to give my portfolio exposure to the potentially lucrative ai revolution.
Here's why I'm seriously considering buying some shares of this trust for my holdings!
<h2 class="wp-block-heading" id="h-us-growth-stocks“>US Growth stocks
As the name suggests, Baillie Gifford US Growth Trust is an investment trust that focuses on US-listed growth stocks.
It caught my attention due to its multiple positions in some of the best and emerging ai technology stocks across the pond.
To give you an idea of some of his holdings, these include SpaceX, amazon, buytesla, Metaplatforms, and more. Not a bad alignment if you ask me!
Some of these companies are at the forefront of cutting-edge ai tools, which could revolutionize the way we work, connect, communicate, shop, and much more.
The shares have risen a whopping 43% in a 12-month period from 139p this time last year to current levels of 199p.
Notable risks
There are certain risks that could hinder the performance of the trust. A big part of this stock selection. For example, I noticed that Baillie Gifford recently sold shares of MasterCard and Alphabet. These are two of the world's leading companies in their respective industries.
At first glance, there could be endless ai-related tools to improve these businesses and their performance. Also, is there any share that could outperform all those in the trust that Baillie Gifford has not yet acquired?
I should caveat this by saying that those who choose the shares for the trust have a good track record and know what they are doing, but this is still a risk.
Next, ai is not a completely new type of technology. It has been around for some time, but seems to have gained popularity due to the rapid advancement of technology in recent years. Investors still aren't sure about that. This is probably why the trust has been overtaken by more traditional ETFs, such as those that track the S&P 500 index. Lack of progress or investors not understanding what they are buying could keep returns lower than expected or anticipated.
Tempting rating and my verdict.
I think one of the best ways to get a valuation for Baillie Gifford US Growth Trust is by comparing the current share price to the net asset value (NAV). The share price is currently trading at a discount of just over 12%. This indicates that the stock could be a bargain right now.
I've been reflecting on how best to capitalize on the ai revolution. Buying shares of singular and obvious leading tech stocks could be a way to go, but with added risk. Some examples of these include Nvidia and Meta Platforms.
However, buying shares in a trust with exposure to many big players could be the way to go for me. Next time I have some extra money, I'll buy some stocks.
