The AI Transformation: A Popular Choice for Investors

The U.S. stock markets faced significant losses following the Federal Reserve’s interest rate hikes beginning in early 2022, and this trend extended into the first months of 2023. Amidst this climate, the AI algorithm ChatGPT—developed by OpenAI, backed by Microsoft—made a seismic impact in the technology world. As the platform’s user base grew exponentially, businesses began speculating on the scale and speed of transformation that AI could bring.

Numerous strategic reports have projected that AI-powered software and services could reach hundreds of billions of dollars in market size over the next five years.

In the first quarter of 2023, companies positioned to benefit from AI technologies became top picks for investors. Demand for microprocessors reached record highs, overwhelming manufacturing capacity. While semiconductor companies began investing in new production facilities and competing to develop next-generation technologies, their stock market performance far outpaced that of other sectors. The microchip manufacturing industry is highly specialized, with few players capable of meeting this surge in demand. Although U.S.–China trade tensions occasionally posed challenges for the sector, high growth expectations maintained strong investor interest.

AI technologies are being applied across a wide range of industries—from analyzing satellite imagery from low-earth orbit and monitoring crop development in agriculture, to autonomous farm equipment, self-driving vehicles using AI-enhanced GPS systems, and even assisting software engineers in writing and debugging code.

At BV Portföy, we launched the BVV – Technology Fund in November 2023 to invest in companies operating in sectors expected to grow alongside advancements in artificial intelligence. Within just two months of its launch, the fund reached TL 80 million in assets under management and delivered a 14.6% return in Turkish Lira terms.

The fund’s portfolio includes companies active in the production of microprocessors, semiconductor manufacturing equipment, software, data processing, cybersecurity, healthcare and medical imaging, e-commerce, and human resources technologies. It focuses on firms that either directly develop AI-driven products and services or quickly integrate such innovations into their offerings. Examples from the portfolio include:

KLA Corporation (KLAC)

KLA is a leader in measurement and control technologies for the semiconductor industry. Its primary business is providing advanced process control and inspection equipment used at various stages of semiconductor manufacturing. These tools are crucial for ensuring precision and yield in chip production. With rising demand driven by high-performance computing, 5G networks, and artificial intelligence, KLA continues to expand in response to the market’s needs. Its cutting-edge technologies and innovations position the company as a key player in the semiconductor value chain.

Intuitive Surgical

Famed for its da Vinci Surgical Systems, Intuitive Surgical combines AI and robotics to enable minimally invasive, highly precise surgeries. These systems enhance a surgeon’s precision and even allow for remote surgeries, improving patient outcomes. The company’s constant innovation places it at the forefront of robotic surgery, making it a compelling component of any AI-focused investment strategy.

Looking ahead into 2024, we expect demand for AI technologies to continue rising. As a result, companies in this space are projected to grow faster and generate stronger profitability compared to peers in other sectors.

By investing in BV Portföy Technology Variable Fund (BVV)—which includes a diversified range of companies positively impacted by AI across multiple industries—you can benefit from the accelerating AI trend while also diversifying your portfolio and managing risk effectively.