What Is ChatGPT Stock and How to Invest in AI

ChatGPT, an artificial intelligence (AI) language model, has garnered attention for its ability to generate human-like text. This has sparked public interest in the rapidly evolving field of AI and how to invest in this technology. Understanding the companies developing AI and accessible investment pathways is key.

OpenAI’s Public Status

ChatGPT is a product developed by OpenAI, an organization with a unique corporate structure. OpenAI is not a public entity, meaning there is no “ChatGPT stock” or “OpenAI stock” available for direct purchase on stock exchanges.

OpenAI operates under a “capped-profit” model. Under this model, a non-profit parent entity, OpenAI, Inc., controls a for-profit subsidiary, OpenAI Global, LLC. This arrangement allows OpenAI to attract investment capital and talent by offering financial returns, while ensuring its mission of developing safe and beneficial artificial general intelligence (AGI) remains paramount.

The “capped-profit” structure stipulates that investors and employees receive a limited return on their investment. Any profits beyond this cap are directed back to the non-profit parent to further its research and mission. Individual retail investors cannot buy shares of OpenAI directly.

Investing in Companies with Direct Ties

Since direct investment in OpenAI is not possible, an alternative involves investing in public companies with financial or strategic ties to OpenAI. Microsoft is the primary example, having made investments and forged a deep partnership with OpenAI. This relationship provides an indirect way for investors to gain exposure to OpenAI’s advancements.

Microsoft’s commitment to OpenAI includes multi-billion dollar investments. This capital infusion supports OpenAI’s computational needs and research efforts. In return, OpenAI leverages Microsoft Azure, the cloud computing platform, for its supercomputing infrastructure and to deploy its models.

The partnership extends beyond financial investment, integrating OpenAI’s technology into Microsoft’s product ecosystem. OpenAI models are incorporated into Microsoft’s search engine, Bing, and its Microsoft 365 suite. Microsoft is also entitled to a percentage of OpenAI Global, LLC’s profits, capped at a specific multiple of their investment. Investing in Microsoft stock (MSFT) offers a pathway to participate in the financial success from this alliance. Other publicly traded companies like Nvidia have also invested in OpenAI and supply hardware for AI development.

Exploring Broader AI Investment Avenues

Beyond companies with direct ties to OpenAI, investors can explore broader opportunities within the artificial intelligence industry. Many technology companies are investing in AI research and development, integrating AI capabilities across their product and service portfolios.

Examples include Alphabet (GOOGL), which applies AI across its search, cloud, and autonomous vehicle initiatives. Amazon (AMZN) uses AI for its e-commerce operations, cloud services through Amazon Web Services (AWS), and voice assistants. Nvidia (NVDA) provides the graphics processing units (GPUs) for training and running large AI models. Other companies like Meta (META), IBM (IBM), Adobe (ADBE), and Taiwan Semiconductor Manufacturing Company (TSM) also contribute to the AI landscape.

For investors seeking diversified exposure to the AI sector without selecting individual company stocks, Exchange-Traded Funds (ETFs) and mutual funds specializing in AI or technology offer a practical solution. These funds hold a basket of companies involved in various aspects of AI, from software development to robotics and hardware manufacturing. Examples of AI-focused ETFs include the Global X Artificial Intelligence and Technology ETF (AIQ), the Global X Robotics and Artificial Intelligence ETF (BOTZ), and the iShares Future AI and Tech ETF (ARTY). Investing in such funds can help mitigate the risk associated with individual stock picking.