Artificial intelligence (AI) has been on a significant rise in recent years. However, the rally has somewhat fizzled in recent months, as investors reconsider valuations and whether all the AI infrastructure spending over the past year will pay off, and in what time frame.
It's hard to fully encapsulate the first wave of AI, but I think things really kicked into gear when it became evident how powerful Nvidia's (NVDA +0.04%) chips were, and when OpenAI released ChatGPT in late 2022 to the world, signaling to most people that AI had fully arrived. From there, the market went wild, as investors began to speculate on AI's future capabilities.
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Currently, the market appears to be torn on what's next for the sector. Some believe it will continue to rise, while others worry that AI stock prices may have risen too quickly.
If you believe in the next wave of AI, here's the smartest way to invest $2,000.
Agentic AI and the classics
Recently, Nvidia's CEO Jensen Huang gave a keynote speech at the annual CES trade show in Las Vegas. The main theme in Huang's speech pertained to the rise of agentic and physical AI, which involves autonomous technology integrated into physical systems, such as vehicles or robotics. "The ChatGPT moment for physical AI is nearly here," Huang said during a video featured in his keynote speech.
If this is the case, the obvious play is to invest in a company working toward agentic AI. Tesla is the first that comes to mind, given its focus on autonomous driving and humanoid robots; however, I still think the company is overvalued.
NYSE: UBER
Key Data Points
In my view, better, less risky ways to gain exposure to autonomous driving include buying Uber Technologies (UBER 0.90%), a key partner for most autonomous driving companies, or larger companies with autonomous divisions, such as Alphabet, which owns Waymo.
And then, of course, if you think AI is going to continue strong, a straightforward way to play the next wave is to simply invest in a data center stock. Investors have expressed concerns about this group due to the elevated debt levels required to build out additional data centers, as well as whether they truly have a moat in renting out chips, most of which are provided by Nvidia.
NASDAQ: NBIS
Key Data Points
However, these data centers will be needed to keep powering AI, given the intense demand. One I like, in particular, is Nebius Group (NBIS +9.60%). The company's data centers provide a full tech stack that helps companies build AI applications, and Nebius also owns a significant stake in other AI-related subsidiaries, such as AVRide, an autonomous driving division.
