Investing in AI Companies: Opportunities, Risks, and What You Need to Know

Companies That Make AI

Artificial intelligence (AI) has quickly moved from science fiction to a practical tool impacting industries such as healthcare, entertainment, travel, and IT. For investors, AI presents both opportunities and risks. Understanding the types of companies involved is essential before making investment decisions.

Two Categories of AI Companies

AI-related companies generally fall into two groups: those that create AI technology and those that use AI to deliver products.

Companies That Create AI

These core technology firms develop the foundational elements of AI, including models, platforms, algorithms, and infrastructure. Examples include OpenAI, Anthropic, Google DeepMind, and Nvidia. OpenAI and Anthropic build large language models like ChatGPT and Claude, while Nvidia designs GPUs optimized for training and running these models.

Companies That Use AI

These companies apply existing AI technologies to build products that serve end users. Examples are Duolingo, Grammarly, Spotify, and Salesforce. Their offerings include personalized learning, music recommendations, writing assistance, and task automation. They’re able to scale quickly by leveraging AI tools developed by the creators.

Choosing the Right Investment

The distinction between creators and adopters matters when aligning investments with your financial goals. AI adopters often fit short-term strategies because they implement existing AI tools to solve specific problems efficiently, allowing faster growth. Conversely, investing in AI creators suits a long-term horizon due to higher research and development costs and a longer path to profitability. However, these companies have the potential to build strong competitive advantages over time.

AI Investment Outlook

According to a 2025 McKinsey report, AI adoption is increasing rapidly. Seventy-eight percent of companies currently use AI, rising from 55 percent just two years ago. Furthermore, 92 percent plan to expand their AI use in the next three years. Larger companies—with at least $500 million in annual revenue—are leading this adoption. Yet, only 1 percent consider their AI implementation mature, indicating significant room for growth.

Investment Opportunities to Watch

• Nvidia: Despite recent challenges, Nvidia reported a 69% year-over-year revenue increase. Its stock trades at around 32 times forward earnings and has appreciated over 87,000% since 2005.
• Broadcom: Known for AI chips reportedly used by Alphabet, Meta, and ByteDance, Broadcom’s stock trades near 38 times forward earnings.
• CoreWeave: Partnered with Nvidia, CoreWeave offers AI-focused cloud infrastructure, differentiating itself from providers like AWS and Azure. Its stock trades at 37.5 times sales.

Risks to Consider

While AI adoption is growing, investing in AI companies involves risks. High R&D costs for creators can delay returns. Market competition is intense, and regulatory scrutiny may increase. For adopters, dependence on third-party AI tools and rapidly shifting technologies could impact profitability. Careful evaluation of each company’s strategy and financial health is critical.

For finance professionals interested in expanding their AI knowledge, exploring specialized courses can be valuable. Visit Complete AI Training for up-to-date offerings that cover AI fundamentals and applications relevant to investment decisions.