Investing in Chat AI GPT Stock: How to Gain Exposure

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Generative AI has exploded onto the scene, arguably becoming the most talked-about technology since the smartphone, with ChatGPT leading the charge. This powerful AI has captivated everyone from top executives and tech gurus to everyday users, demonstrating an uncanny ability to perform diverse tasks like composing poetry, writing code, or simplifying complex topics into easy-to-understand summaries. It’s even conquered challenging exams for law, medicine, and business degrees, and continues to evolve with frequent updates.

Infographic explaining ChatGPT's generative AI technology and its investment implications for chat ai gpt stock seekers

ChatGPT, short for “Chat Generative Pre-Trained Transformer,” utilizes a straightforward chat interface for direct question-answering, making it as user-friendly as a Google Search. Launched in November 2022, its free AI chat interface rapidly acquired 100 million users within just two months and now boasts 400 million weekly users. This technology holds significant potential to disrupt numerous industries, from internet search to content creation. For investors, understanding the landscape surrounding potential Chat Ai Gpt Stock opportunities is crucial, even though ChatGPT itself isn’t directly tradable.

This article delves into the investment implications of ChatGPT and the broader field of generative AI chatbots. We’ll explore how investors can gain exposure to this technological wave and discuss the considerations involved in investing in companies closely tied to ChatGPT’s ecosystem.

How to Invest in ChatGPT-Related Companies

Since ChatGPT isn’t a publicly traded entity and its creator, OpenAI, also remains private, direct investment isn’t possible. However, investors have several avenues to gain indirect exposure to the technology and its growth trajectory.

The most prominent route is through Microsoft (NASDAQ:MSFT), a tech behemoth that forged a strategic partnership with OpenAI back in 2019. Microsoft has poured billions into the AI startup, demonstrating strong confidence in OpenAI’s potential. Following ChatGPT’s public unveiling, Microsoft deepened its commitment with a $10 billion investment in early 2023, signaling its belief that artificial intelligence represents the next major computing paradigm.

Another significant player offering exposure is Nvidia (NASDAQ:NVDA). As one of the world’s most valuable semiconductor firms, Nvidia leads the market in graphics processing units (GPUs). These GPUs and accelerators are fundamental to AI development, serving as the hardware backbone for training large language models like ChatGPT and processing vast datasets. They are indispensable components in many machine learning models, and their high demand often leads to supply shortages. Nvidia holds a dominant position in the data center GPU market, successfully fending off competitors like Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC).

Finally, Arm Holdings (NASDAQ:ARM) presents another compelling option for investors seeking exposure to the generative AI revolution, including technologies like ChatGPT. Arm collaborates closely with Nvidia and licenses its highly regarded CPU designs, prized for their power efficiency, to Nvidia and other partners. Arm’s CPU architecture excels at minimizing power consumption, which explains its ubiquity in 99% of smartphones and its growing popularity in AI data center components. Running demanding AI applications such as ChatGPT requires substantial power; as the AI industry scales, demand for Arm’s energy-efficient CPUs is expected to surge.

Additionally, several exchange-traded funds (ETFs) offer broad exposure to a basket of stocks connected to ChatGPT and the generative AI space.

1. Microsoft (MSFT)

Microsoft is widely recognized as a diversified global technology leader, generating revenue from an extensive portfolio including the Windows operating system, Azure cloud infrastructure, Office software subscriptions, Surface hardware, Xbox gaming products, and the LinkedIn professional network.

Recently, however, Microsoft has garnered significant attention due to its strategic alliance with OpenAI. The company has placed a substantial bet on OpenAI and ChatGPT, with CEO Satya Nadella identifying AI as the next crucial computing platform. Microsoft has already integrated the capabilities of ChatGPT and OpenAI’s tools into various products, notably Azure and Copilot, its AI assistant.

This partnership is yielding tangible results. Microsoft reports growing traction with Azure OpenAI services, now utilized by over 65% of Fortune 500 companies. In the quarter ending December 2024, these AI features contributed six percentage points to Azure’s revenue growth. As of that same period, Microsoft’s AI revenue run rate exceeded $13 billion, marking a staggering 175% year-over-year increase.

For investors seeking the company most closely intertwined with OpenAI and ChatGPT, Microsoft stands out as the primary choice. Nevertheless, it’s important to remember that Microsoft is a massive corporation, and only a fraction of its overall business is directly exposed to ChatGPT’s immediate impact.

2. Nvidia (NVDA)

Nvidia’s stock has soared over the past decade as its GPUs have become essential components in diverse fields ranging from gaming and autonomous vehicles to artificial intelligence.

AI applications place extraordinary demands on computing resources, and Nvidia’s chips have proven exceptionally adept at handling these intensive workloads, outperforming competitors. Demand for its chips has skyrocketed over the last year, fueled by companies building out the infrastructure for AI platforms. More than a year after ChatGPT’s debut, Nvidia has clearly emerged as a major beneficiary of the AI boom, supplying the critical hardware needed by cloud providers and other tech firms to run sophisticated AI models. This surge in demand has led to revenue more than tripling over several quarters.

Investment bank UBS estimated that training ChatGPT initially required 10,000 Nvidia GPUs, and analysts now suggest that around 30,000 Nvidia GPUs are potentially being used to operate OpenAI’s chatbot. This number is likely to climb as ChatGPT continues to expand its user base and capabilities. OpenAI CEO Sam Altman has repeatedly praised Nvidia’s hardware. Furthermore, OpenAI is collaborating closely with Nvidia, Microsoft, and Arm on the ambitious Stargate Project, a reported $500 billion initiative aimed at constructing new AI data centers and advancing AI research and development within the United States.

Nvidia has also partnered with Microsoft to construct a massive cloud AI supercomputer, leveraging tens of thousands of Nvidia GPUs and associated AI software tools. Given its dominance in AI computing hardware, Nvidia presents a strong case as a core AI stock holding for investors looking to capitalize on the growth of artificial intelligence, including the ecosystem supporting technologies like ChatGPT.

3. Arm Holdings (ARM)

Arm Holdings has experienced accelerating growth recently, driven by increasing demand within the AI sector. The company benefits significantly from its low-power CPU architecture, which offers superior efficiency compared to the traditional x86 architecture used by competitors like Intel and AMD.

Arm employs a distinctive business model, generating revenue first through licensing its designs and subsequently through royalties collected when products incorporating those designs reach the market. Microsoft, for instance, is a key customer utilizing Arm architecture for its new Cobalt CPU, designed for cloud-native workloads and indicative of the rising demand for Arm’s technology in the AI era.

In its earnings report for the quarter ending December 2024, Arm’s management highlighted strong AI-related demand and increased adoption of its computer subsystems across major market segments. Arm’s trajectory appears closely linked to the pace of AI adoption; the speed at which generative AI technologies like ChatGPT gain widespread use will likely be a primary determinant of the company’s future growth.

ETFs with Exposure to ChatGPT

While no ETFs offer direct investment in ChatGPT or OpenAI, several provide exposure to key companies involved in the generative AI space, including those closely associated with ChatGPT. Here are a few examples:

1. Invesco AI and Next Gen Software ETF (IGPT)

The Invesco AI and Next Gen Software ETF (NYSE:IGPT) concentrates on AI stocks deeply involved with generative AI and related software development. Its top holdings typically include major players like Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), Nvidia, and Meta Platforms (NASDAQ:META), all of which are investing heavily in generative AI initiatives. This ETF tracks the STOXX World AC NexGen Software Development Index and has an expense ratio of 0.58%.

2. Roundhill Generative AI & Technology ETF (CHAT)

Launched in May 2023, the Roundhill Generative AI & Technology ETF (NYSE:CHAT) was the first ETF specifically designed to track companies focused on generative AI. Roundhill posits that generative AI will be a transformative technology driving significant productivity gains. Its leading holdings often feature Nvidia, Microsoft, and Alphabet. Being relatively new, it carries a higher expense ratio of 0.75%.

3. iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)

For investors seeking broader exposure to AI and related fields, the iShares Robotics and Artificial Intelligence Multisector ETF (NYSEMKT:IRBO) offers a diversified approach. Holding over 100 stocks, this ETF is one of the larger funds targeting the AI sector. It aims to track an index of companies poised to benefit from long-term growth and innovation in robotics and artificial intelligence. Top holdings often include companies like Broadcom (NASDAQ:AVGO), Super Micro Computer (NASDAQ:SMCI), and Nvidia.

Should You Invest in ChatGPT-Related Stocks?

ChatGPT and the broader generative AI movement possess the potential to revolutionize numerous aspects of our lives, from work and education to entertainment. However, it’s crucial to recognize that this technology is still in its nascent stages. Concerns about safety and ethical use persist, and the path to widespread monetization is just beginning.

The initial excitement surrounding AI triggered a significant rally in related stocks early in 2023, propelling shares of companies like C3.ai (NYSE:AI) and others perceived to be AI players. Subsequently, some of this hype has subsided, leading to pullbacks in certain AI-related stock prices.

Despite the inherent volatility and early-stage risks, investing in select companies poised to benefit from the AI wave could be a compelling opportunity for investors with a higher risk tolerance. Microsoft appears to be one of the more stable investments in this space, given its diversified business, deep integration plans for AI, and strong partnership with OpenAI.

Nvidia is also well-positioned as a key enabler of AI, likely benefiting from sustained demand for its high-performance computing hardware. Arm Holdings offers similar exposure through its crucial role in providing power-efficient CPUs essential for scaling AI applications.

While the 2022 tech downturn might have made some investors cautious, the emergence of ChatGPT has undeniably crystallized the transformative potential of AI, igniting a new phase of innovation and competition.

A diversified approach, perhaps involving investments in all three key players (Microsoft, Nvidia, Arm) held for the long term, could be a prudent strategy for gaining exposure to the growth surrounding technologies like ChatGPT. Alternatively, investing in a specialized AI ETF provides broader diversification across the sector.

Investing in any emerging technology carries risks, but the potential upside associated with the generative AI revolution could be substantial for patient, long-term investors.

ChatGPT FAQ

Can you buy stock in ChatGPT?

ChatGPT is owned by OpenAI, a private company. Therefore, you cannot buy stock directly in ChatGPT. However, you can invest in Microsoft, which holds a significant stake (reportedly close to half) in OpenAI.

Who owns ChatGPT?

ChatGPT is owned by OpenAI. OpenAI was initially founded as a non-profit organization focused on ensuring artificial general intelligence (AGI) benefits humanity. It later restructured into a “capped-profit” company in 2019.

Can I buy stock in OpenAI?

No, OpenAI is a private company and is not listed on any public stock exchange, so you cannot buy its stock directly.

Is OpenAI a publicly traded company?

No, OpenAI is not publicly traded. The company currently has no stated plans to pursue an initial public offering (IPO).

Is ChatGPT publicly traded?

No, ChatGPT itself is not a publicly traded entity. It is a product developed and owned by the private company OpenAI.

What’s the best AI stock to buy?

Predicting the single best-performing AI stock is impossible. However, Nvidia has demonstrated strong leadership in the generative AI space so far and has been a major beneficiary of the AI boom due to the critical role of its hardware. It is often considered a core holding for AI exposure and is expected to continue benefiting from the sector’s growth.