How to make informed AI investment decisions

Sponsored content

Artificial Intelligence (AI) is quickly finding its use cases in multiple industries. For example, in the manufacturing industry, AI-powered robots are being used to work 24/7 as they do not get tired and increase production speed. Similarly, in finance, AI is reducing loan processing times and helps in early detection of fraud. 

Due to such widespread usage, AI is expected to have a huge positive impact on the world’s economy. By 2030, AI could add $15.7 trillion (Rs. 1,30,210 crores) to the global economy. This would lead to an increase in the Gross Domestic Product (GDP) by about 14%.

Thus, in the coming times, it is expected that AI will create new industries and make economies stronger. As an investor, “now” could be the perfect time to invest in the AI sector and benefit from its future growth. 

In this article, let’s see how you can make informed AI investment decisions in 2025. 

Invest in the best AI stocks in India

AI is one of the fastest-growing industries. The Indian AI sector is projected to reach a valuation of approximately $8 billion (Rs. 66,400 crores) by 2025, growing at a compound annual growth rate (CAGR) of over 40% from 2020 to 2025.

In India, several companies are using AI to improve their business models and services. If you are looking to invest in AI stocks, it is important to consider companies that are financially strong and have good growth potential. Below are some of the top AI-related stocks in India:

1. Tata Elxsi Ltd.

Tata Elxsi is a leader in AI-driven technology solutions. It even has a dedicated AI Centre of Excellence. The company has strong financials with a Return on Equity (ROE) of 34.62% and Return on Capital Employed (ROCE) of 46.60%.  Also, it has zero debt, which makes it a stable investment.

2. Bosch Ltd.

Bosch is well-known for its automation and AI-integrated manufacturing technologies (especially in the automotive sector). It also has a debt-free status and a good ROE of 21.59% and ROCE of 28.01%, which indicate strong profitability.

3. HCL Technologies Ltd.

HCL is a top IT services company in India that is heavily investing in AI and cloud computing. With a large market capitalisation of Rs. 4,43,982 crore (as of February 26, 2025), HCL is a strong player in the AI sector. 

Also, the company is highly profitable and returns ROE of 29.35% and ROCE of 38.56%.

4. Infosys Ltd.

Infosys is a global IT giant that is investing heavily in AI solutions and automation.

The company does not have any debt in its balance sheet and maintains a high ROE  of 37.02%.

Diversify your AI investments

Investing in the AI sector can be highly profitable, but it also comes with risks due to rapid technological changes and market fluctuations. One of the best ways to manage these risks is through diversification. This means spreading your investments across different companies and industries. Let’s understand in detail:

Why is diversification important

If you put all your money into just one AI company, you could face major losses if that company struggles. By investing in multiple AI stocks, you reduce the risk because even if one stock underperforms, others in your portfolio might do well and balance the overall returns.

How to diversify

Try to invest in both large and small & mid-cap companies. That’s because:

• Most large-cap companies are financially stable and already have a strong market position.
• In comparison, mid and small-cap companies are fast-growing and may offer higher returns in the future.

By investing in both, you get the stability of large firms while also benefiting from the high growth potential of smaller firms.

Additionally, prefer investing across different industries. Please note that AI is not limited to just one industry. You can diversify by investing in companies that use AI in various fields:

• Healthcare: AI helps in drug discovery and patient management.
• Finance: AI is used for fraud detection and risk assessment.
• Retail: AI improves customer experience and inventory management.

By spreading your investments across different industries, you reduce the impact of any single industry slowdown.

If you are just starting, go for mutual funds and ETFs

Instead of directly buying AI stocks, you can invest in mutual funds (MFs) and Exchange-Traded Funds (ETFs) that focus on AI. This eliminates the need to pick individual stocks. Additionally, you get the following benefits:

• Diversification: Instead of putting all your money in one company, MFs and ETFs invest in multiple AI-related companies. This reduces risk.
• Professional management: Mutual funds are managed by experts who carefully select the best AI companies to invest in.
• Easier for beginners: If you are new to investing, MFs and ETFs can allow you to invest in the AI sector without needing deep market knowledge.

Conclusion

Nowadays, several businesses like manufacturing companies, banks, NBFCs, hospitals, and online marketplace are using AI to automate repetitive tasks and improve operational efficiency. Such widespread usage of AI presents a lucrative opportunity for investors like you. By investing in strong AI stocks early, you can benefit from the future growth of AI. 

However, to reduce investment risk, you should try to create a diversified portfolio having a mix of large, mid, and small-cap AI stocks across different industries. Additionally, if you are a beginner, consider AI-focused mutual fund schemes and exchange-traded funds. 

Disclaimer: the author(s) of the sponsored article(s) are solely responsible for any opinions expressed or offers made. These opinions do not necessarily reflect the official position of Daily News Hungary, and the editorial staff cannot be held responsible for their veracity.