What Is ChatGPT and How to Invest in It

ChatGPT isn't publicly traded, and OpenAI, the company that built it, isn't either. However, there are a number of ways to get exposure to ChatGPT.

The most direct one is through Microsoft (NASDAQ:MSFT), the tech giant that has had a strategic partnership with OpenAI since 2019 and has invested billions of dollars into the AI startup. After ChatGPT was unveiled in early 2023, Microsoft invested $10 billion in OpenAI, showing both the company's confidence in OpenAI's potential and its belief that artificial intelligence is the next major computing platform.

Another way to get exposure to ChatGPT is through Nvidia (NASDAQ:NVDA). Nvidia is one of the world's most valuable semiconductor companies and the leading producer of graphics processing units (GPUs). Its GPUs and accelerators are essentially the building blocks of artificial intelligence, training large language models like ChatGPT and processing large amounts of data. They are a key component in many machine learning models, and they have been in such high demand that there are frequent shortages.

Nvidia dominates the market for data center GPUs, and it's resisted competition from peers like Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC).

Finally, Arm Holdings (NASDAQ:ARM) is also a good choice for investors looking to get exposure to ChatGPT and the broader generative AI revolution. Arm is a close partner with Nvidia and licenses its CPU designs to Nvidia and other partners who prize it for its efficiency.

Arm's CPU designs excel at conserving power, which is why they're used in 99% of smartphones and why they're becoming popular for AI data center components. Running AI applications like ChatGPT demands a lot of power, and as that industry scales, demand for Arm's CPUs is likely to rise as well.

There are also a number of exchange-traded funds (ETFs) that broadly offer exposure to stocks related to ChatGPT and generative AI.

Microsoft is best known as a diversified global tech giant. It makes money from a wide range of products, including its Windows operating system, Azure cloud infrastructure service, subscription products like its Office software suite, hardware like Surface, gaming products under Xbox, and the LinkedIn professional social network.

However, more recently, Microsoft has been getting attention for its strategic partnership with OpenAI since the company has bet big on OpenAI and ChatGPT. Microsoft CEO Satya Nadella has called AI the next major computing platform and has already leveraged the power of ChatGPT and OpenAI's tools in a number of products, including Azure and Copilot, Microsoft's new AI assistant.

Its partnership with ChatGPT is also delivering results in its AI partnership, as Microsoft has seen traction in Azure OpenAI. More than 65% of the Fortune 500 now use Azure OpenAI, and in the December 2024 quarter, those features increased Azure revenue by six percentage points. As of December 2024, Microsoft's AI revenue run rate had topped $13 billion, up 175% year over year.

If you're looking for the company that's most closely connected with OpenAI and ChatGPT, Microsoft is your best choice. However, the company is big enough that only a relatively small amount of the business is exposed to ChatGPT.

Nvidia stock has taken off over the last decade as its graphics processing chips have become a vital part of everything from gaming to self-driving cars to artificial intelligence.

AI comes with extraordinary computing demands, and Nvidia's chips are able to handle the workload better than its competitors. Demand for its chips has skyrocketed over the last year and is soaring as the company sells the building blocks for AI platforms. More than a year after ChatGPT's release, Nvidia has emerged as the biggest winner from the AI boom since cloud infrastructure companies and others need its chips to run AI models. Revenue more than tripled over multiple quarters.

UBS (NYSE:UBS) estimated that 10,000 Nvidia graphics processing units were used to train ChatGPT, and some analysts estimate that 30,000 of its GPUs are now being used to run OpenAI's chatbot. That number is likely to rise as ChatGPT grows. OpenAI CEO Sam Altman has praised Nvidia's hardware on multiple occasions. OpenAI is also working closely with Nvidia, Microsoft, and Arm on the new Stargate Project, a $500 billion plan to build new AI data centers and promote AI research and development (R&D) in the United States.

Nvidia has also teamed up with Microsoft to build a massive cloud AI computer using tens of thousands of Nvidia GPUs and other Nvidia AI software tools.

Given Nvidia's strength in AI computing power, it looks like a good AI stock to own if you're looking for an investment that will benefit from the growth of artificial intelligence.

Arm Holdings has seen its growth rate accelerate in recent months as AI demand begins to flow. The company is benefiting from its low-power CPU architecture, which is more efficient than the X86 alternative from Intel and AMD.

Arm operates with a unique business model, earning revenue from licensing its designs and then from royalties once those products come to market. For example, one of its customers is Microsoft, which uses Arm architecture for its new Cobalt CPU, which runs cloud-native and general-purpose workloads and reflects increasing demand for its products in the AI era.

In its December quarterly earnings report, management noted AI demand and rising adoption of computer subsystems across major market segments.

Arm's fortunes seem closely tied to AI demand, as the speed with which generative AI technology, including ChatGPT, gains adoption will determine the company's growth.

The Invesco AI and Next Gen Software (NYSEMKT:IGPT) focuses on AI stocks that are closely related to generative AI and ChatGPT.

Its top three holdings, for example, are Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), Nvidia, and Meta Platforms (NASDAQ:META), three companies that are all investing heavily in generative AI.

The ETF is based on the STOXX World AC NexGen Software Development Index, which comprises companies with significant exposure to technologies that contribute to advancements in software development. The ETF has been around for almost 20 years and charges an expense ratio of 0.58%.

Roundhill Generative AI & Technology ETF (NYSEMKT:CHAT) was the first ETF designed to track generative AI stocks. Roundhill believes that generative AI will be one of the most impactful technological innovations of the future as it delivers significant productivity growth.

Its top three holdings are currently Nvidia, Microsoft, and Alphabet. The fund began trading in May 2023, making it one of the newer ETFs available on the market. It has an expense ratio of 0.75%.

If you're looking for a broader approach to a generative AI ETF, the iShares Robotics and Artificial Intelligence Multisector ETF (NYSEMKT:IRBO) could be a good option.

This ETF holds more than 100 stocks and is one of the largest ETFs focusing on AI. The fund seeks to track an index of stocks that could benefit from long-term growth and innovation in robotics technologies and artificial intelligence.

Its top three holdings include Broadcom (NASDAQ:AVGO), Super Micro Computer (NASDAQ:SMCI), and Nvidia.

Generative AI has become the most hyped technology since the smartphone, and ChatGPT is the biggest reason why.

The technology has wowed everyone from CEOs to technologists to ordinary users, performing a wide range of activities like writing poetry and computer code or explaining complex subjects in neatly packaged paragraphs. It's also passed high-level exams for law school, medical licensing, and MBA programs, and it continues to get better with regular updates.

ChatGPT (the name stands for "Chat Generative Pre-Trained Transformer") uses a simple chat interface to answer questions directly and is as easy to use as Google Search. The free AI chat interface signed up 100 million users in just two months after its November 2022 launch, and it has the potential to disrupt industries from internet search to content creation. It now has 400 million weekly users.

In this article, we'll discuss the implications for ChatGPT and generative AI chatbots more generally, how you can get exposure to it as an investor, and whether you should invest in ChatGPT.

1. Invesco AI and Next Gen Software ETF

2. Roundhill Generative AI & Technology ETF

3. iShares Robotics and Artificial Intelligence Multisector ETF

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