Investing in AI: how to avoid the hype

AI boom brings fresh challenge for investors.

Dizzying valuations have made some investors wary of the technology hype cycle. This concept, popularised by consultancy Gartner, starts with a trigger, such as the launch of ChatGPT, followed by inflated expectations and then disillusionment. Even if a technology moves to mass adoption, many early stage innovators can fail along the way.

GAM's Hawtin said he has also hunted out companies that provide the "picks and shovels," necessary for enabling new AI technology. Jon Guinness, tech portfolio manager at Fidelity International, said management consultancy Accenture is in his portfolio because as businesses consider how to use AI, "I strongly think you call in the experts."Trevor Greetham, head of multi-asset at Royal London Investment Management, said he was "overweight" in dominant tech stocks in part because AI supported their valuations, but he cautioned against AI-themed stocks.

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