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What is generative AI?

Generative AI is a special form of artificial intelligence that generates new content such as text, images, music, or videos. In contrast to traditional AI, which makes decisions and predictions, generative AI aims to produce creative and meaningful content. Potential use cases include automatic code generation, molecule design for drugs, and financial analysis. Generative AI uses large amounts of data and artificial neural networks, especially deep learning, to achieve optimal results. Deep learning, a sub-area of machine learning, has established itself as an important driver of AI development in recent years.

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Relevance of generative AI for investors

Generative AI that simulates human thinking is changing the world. It optimizes production processes and has already found its way into everyday life, despite still being in the early stages of its development. This disruptive technology offers significant opportunities for investors by creating new business models and markets.

  • Who stands to profit directly? Semiconductor manufacturers, producers of AI infrastructure, and cloud providers.
  • Who stands to profit indirectly? Companies that use AI to increase efficiency and automation, as in Industry 4.0.
  • Market growth: The AI market is expected to reach a volume of EUR 222.53 billion by 2025 and grow to EUR 921.83 billion by 2031, with a compound annual growth rate (CAGR) of 26.60%. The generative AI sector will even achieve a CAGR of 36.99% in this period and grow to USD 442.07 billion by 2031.

Generative AI: new return opportunities for investors

Innovative companies with great growth opportunities are particularly popular on the stock market. Generative AI combines these factors like no other technology of the 21st century.

Example: Nvidia

  • After the introduction of ChatGPT in March 2023, Nvidia's stock increased by more than 600% by May 2025.
  • The stock also demonstrated strong performance prior to this, underlining the advantages of an early investment.

Infrastructure solutions

  • But it isn’t just semiconductors that are in demand; providers of infrastructure solutions are also benefiting from the commercialization of AI.
  • Operators of high-voltage grids and data centers are experiencing increasing demand.
  • According to the International Energy Agency (IEA), global electricity demand for data centers will more than double to around 945 terawatt hours by 2030.
  • Large operators such as Microsoft and Oracle are even planning to use their own mini-nuclear power plants to cover their electricity requirements.

These examples show diverse investment opportunities in the field of artificial intelligence.

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Weighing up risks and uncertainties

  • Artificial intelligence (AI) is not yet fully developed. Generative AI models such as ChatGPT, Claude or DeepSeek make mistakes and sometimes generate content without a real basis, known as “hallucinations”. Newer versions are particularly susceptible to this. According to OpenAI, GPT-3 makes errors in about a third of cases when asked questions about public persons.
  • Much is also still unclear in regulatory terms, particularly regarding data protection, as a lot of data is required for training, but personal information must remain protected. The young AI sector not only harbors technological and regulatory risks, but also valuation differences on the stock market. Rapid share price rises, such as Nvidia’s, raise questions about sustainability. In addition, potential future profits are difficult to forecast.
  • For example, DeepSeek’s generative AI is said to be cheaper than existing models, which triggered profitability concerns in the industry and caused AI share prices to slump temporarily. The key question remains whether and when technology companies will be able to generate sustainable returns from their AI investments.

How the market is developing – a look at current trends

  • Market development and business combinations: Companies merge to strengthen their market position. For example, Salesforce is acquiring Informatica for USD 8 billion.
  • AI developments: OpenAI acquires Jony Ive’s hardware startup “io” to develop physical AI products.
  • Specific areas of application: AI is increasingly being integrated into production and medicine, e.g. to improve diagnoses and treatments.
  • Hybrid intelligences and quantum computers: Focus on the combination of human and artificial intelligence as well as research on quantum computers to increase the performance of AI.
  • Risks and regulation: Risks such as disinformation require a legal framework. The EU has adopted binding regulations in 2024; Switzerland is following the Council of Europe with three goals: promoting innovation, protecting fundamental rights and strengthening trust.
  • Global AI governance: The UN is working on a global AI architecture and has been driving the topic of "AI governance" forward since 2024.

Frequently asked questions

Conclusion

Even though everyone has been talking about generative AI since the launch of ChatGPT, the technology is still in its infancy. And yet it has already begun to profoundly change our everyday lives. Its rapid advance means opportunities not only for companies, but also for investors. The focus on generative AI has given rise to completely new business models and markets. They could offer investors one of the greatest opportunities for returns in the next decade. At the same time, it is important to understand what hype, the role of regulation, and the extent of actual productivity gains are. In addition, a long-term investment horizon is necessary, because the real winners have yet to emerge in this still young sector. Diversification is therefore key.

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