Investing in AI is thrilling—but it’s not without complexity. Whether you’re eyeing infrastructure, applications, or emerging startups, here are the key things to think about before diving in:
Strategic Considerations
1. AI Is Not One Thing
- AI spans infrastructure, software, robotics, cloud platforms, and consumer applications.
- Decide whether you want exposure to enablers (like Nvidia or Arista Networks) or builders (like OpenAI partners or enterprise AI platforms).
2. Hype vs. Reality
- AI is still a young and evolving field. Some companies are overvalued based on future potential, not current earnings.
- Avoid chasing trends mindlessly—look for real revenue, scalable products, and defensible IP.
3. Diversification Is Key
- AI investing can be volatile. Use ETFs or thematic funds to spread risk across sectors and geographies.
- Even within AI, it’s wise to diversify across hardware, cloud, software, and services.
4. Valuation & Timing
- Many AI stocks (especially Nvidia) are trading at high multiples. Consider entry points, technical trends, and macro conditions.
- Long-term conviction matters more than short-term timing.
5. Regulatory & Ethical Risks
- AI faces scrutiny around privacy, bias, and job displacement.
- Companies with strong governance, transparency, and ethical AI frameworks may be better long-term bets.
Investment Vehicles to Consider
| Type | Pros | Cons |
|---|---|---|
| ETFs | Diversified, lower risk | Less upside than individual stocks |
| Mutual Funds | Professional management |
Higher Fees, less flexibility |
| Direct Stocks | High upside potential | Higher risk, requires research |
| Private Equity / Startups |
Early-stage growth | Illiquid, high failure rate |
Due Diligence Tips
- Research company fundamentals: Revenue growth, AI-related patents, partnerships.
- Understand the tech stack: Is the company building core AI models, or just integrating them?
- Follow industry trends: Cloud migration, edge computing, generative AI, and enterprise adoption.
Chris graduated from the University of Maine, where he played hockey on a scholarship, and retired from professional hockey in 2007. In the community, he remains engaged, serving as a youth hockey coach. Chris holds the CERTIFIED FINANCIAL PLANNER™. Outside the office, he enjoys trying new food and wine, reading, traveling, playing golf and hockey, fat tire biking, and donating to local charities. His passions include being a husband and dad, lake life with the family, watching his son and daughter play sports, and spending time with his wife. To learn more about Chris, connect with him on LinkedIn.
Heisten Financial, LLC is a registered investment advisor with the SEC. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed.