Is Artificial Intelligence Just Hype or More Than a Fad?

Over the last several years, we’ve heard plenty of talk about artificial intelligence. There’s even debate about whether AI will ever become sentient and decide to destroy humanity. In fact, AI quickly became a significant part of life a few years ago for people who adopted AI assistants like Apple’s Siri or Amazon’s Alexa.

Generative AI, in particular, has been in the spotlight in the wake of ChatGPT’s launch early this year, which brought the concept to the public. Anyone with a computer and an internet connection can now access generative AI. The term describes a type of machine learning that can leverage the data that it scrapes from the web, or that is fed to it in order to generate content. That can range from text and images to videos. However, there are some concerns that the technology could threaten the livelihoods of professional content creators such as writers or graphic designers.

The use cases for AI are growing in number at a rapid pace. However, the question for many investors remains as to whether it’s worth investing in AI or whether it’s better to avoid it as a passing fad.

Other Failed Tech Fads

First, let’s discuss some past tech fads. A key difference between passing fads and life-changing technologies is that fads are short-lived and don’t end up changing anything. For example, Google Glass garnered lots of attention when it was first announced.

In fact, it triggered a full-blown smart-glasses fad, which developed further into Snap’s Spectacles. Ultimately, the hype lacked staying power, especially given the privacy concerns of wearing a pair of glasses capable of recording people without their knowledge or agreement.

Other failed tech fads include Google’s game-streaming device, Stadia, the Amazon Fire Phone and the Windows Phone, MySpace, and Google Plus.

Some technologies behave like a fad temporarily, although they may actually be harbingers of what’s to come. For example, talk about the metaverse has died down dramatically. Many companies simply gave up on their efforts to advertise in virtual worlds. We could eventually see the metaverse become what the idealists expect it to be one day. Unfortunately, it could be years before the verdict is in.

On the other hand, technologies like the self-driving car have real-world applications and should make the world’s roads much safer — when the technology has advanced enough.

How to Avoid Being Caught Up in Mere Hype

Generally, it’s a good idea not to leap at every seemingly great idea the moment it appears. The problem with fads is that they appear from nowhere overnight. Then they vanish virtually without a trace after a short time. As a result, they cost investors who tried to “get in on the ground floor” significant amounts of money and time.

Additionally, technologies that aren’t just fads will solve real-world problems that most people experience. If you can’t see a real solution to a real problem, there’s a danger of that technology being a passing fad. It’s a good idea to consider whether the technology is worth using, especially by those closest to the person or company that developed it.

Fad technologies may also be popular among only a small group of people and tend to be non-essential, intended merely for amusement.

What’s the Verdict on Artificial Intelligence?

Unfortunately, it can be challenging to tell the difference between real, life-altering technology and mere fads, especially in the beginning. People tend to say the same things about both, often labeling them as “revolutionary.”

However, we’re already seeing signs that AI is ubiquitous — even more than people realize. For example, one estimate suggests that 77% of the world’s population uses AI, but only one-third are actually aware of it. This indicates that AI is actually more embedded in our world than most people realize.

AI also solves some real problems in terms of finding information. That said, in its current state, it also creates potential problems with credibility and accuracy. For example, The Guardian put out a warning that ChatGPT was inventing fake Guardian articles to use as “sources” for the “news” articles it was generating.

While it’s possible that AI will fizzle out, that seems unlikely at this point. However, its longevity depends on the technology continuing to improve to the point where it doesn’t make things up and report them as alleged “facts.”

Investing in Artificial Intelligence

If, after considering the ways to recognize fads and hype, you decide that AI sounds like a legitimately life-altering technology, you may be wondering about how to invest in it. Exchange-traded funds like the iShares Robotics and Artificial Intelligence Multisector ETF (IRBO), theWisdomTree Artificial Intelligence and Innovation Fund (WTAI), or the ARK Autonomous Technology and Robotics ETF (ARKQ) may offer an easy way to invest in multiple companies with exposure to robotics and AI.

Alternatively, you could opt for something like the iShares Exponential Technologies ETF (XT), which invests in innovation leaders and technology producers. Other options include the Vanguard Information Technology ETF (VGT), which focuses on the broad IT sector and provides some AI exposure. That means it could also offer some protection if AI proves to be a passing fad. VGT invests in all types of tech companies, including big names like Apple and Microsoft.

Or you could invest in the components necessary for AI by targeting semiconductors, which drive almost all modern technology but especially AI. The VanEck Semiconductor ETF (SMH) and the Invesco Dynamic Semiconductors ETF (PSI) both provide exposure to the space.

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