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artificial intelligence (ai) is now widely expected to transform the world. In fact, technology experts and executives will gather today (November 1) in the United Kingdom for a two-day ai summit to discuss security implications. Here, I will highlight three UK stocks that I can buy today to invest in this revolutionary technology.
Extensive exposure
First we have to Polar Capital technology Trust (LSE: PCT). This is a technology-focused investment trust in the FTSE 250 which has all the biggest names in ai in its portfolio.
These include microsoft (co-owner of OpenAI, the creator of ChatGPT), Metaplatforms and Apple. Another important participation is Alphabeta true technology pioneer and owner of Google DeepMind, a British-American artificial intelligence research laboratory.
I also like that semiconductor stocks are a predominant theme in the portfolio. This is because the amount of data processed and stored by ai applications is enormous and growing exponentially.
This means that increasingly powerful chips will be needed, which will benefit companies like NVIDIA, amd and Semiconductor manufacturing in Taiwan. All three stocks are currently in the top 10 positions.
The trust therefore provides investors with broad exposure to the growth and development of the ai industry.
Now, one risk I would highlight is that some of these stocks (particularly Nvidia) are quite expensive. If a correction occurs in the Big tech market, this could temporarily push Polar Capital’s share price down.
That said, the trust is currently trading at a 14% discount to the value of its assets. Therefore, this could prove to be a great entry point in a few years. That’s why I plan to purchase some shares in November.
Unlisted exhibition
Below I will highlight Scottish Mortgage Investment Trust (LSE: SMT).
The stock price has been in serious trouble in recent years as investors sold off riskier stocks. This includes those invested in private companies, which make up almost 30% of the growth trust’s portfolio.
There is a risk that this bearish trend will continue for a while longer.
However, it is worth noting that most of Scottish Mortgage’s private holdings are very large and already benefiting from ai.
For example, Stripe is a digital payments processor recently valued at $94 billion. Its billing and payment solutions power ChatGPT Plus, the subscription version of the generative ai chatbot.
Meanwhile, another large holding company is ByteDance. This Chinese company owns TikTok, which uses artificial intelligence to identify items in popular videos and recommend them on TikTok shop, its e-commerce marketplace.
Some investors see TikTok shop as a major threat to Amazonanother holding in the portfolio.
I recently bought more Scottish Mortgage shares due to the current share price weakness.
Clean databases
Finally I go with FTSE 100 data analytics giant CHILL OUTwhose stocks are on my buy list.
ai systems need large databases to learn from, and the amount of high-quality data RELX has is enormous. In my opinion, this should give you a lasting competitive advantage.
One of its new products is Lexis+ ai, a tool for lawyers that automatically generates draft legal documents when requested. (further reliably than ChatGPT).
However, once again, this is a highly valued stock that trades at a price-to-earnings multiple of 31. If market sentiment deteriorates, RELX stock could take a hit.
However, long-term generative ai looks poised to further enhance the value of the company’s data sets for its customers.
