Artificial intelligence (AI) is already changing the world. Otherwise known as the use of algorithms to replicate human learning, the market is growing so rapidly that revenue is forecast to reach a compound annual growth rate of 57% by 2025.

Globally, the tech giants are leading the race to dominate AI. Companies such as Apple, Alphabet, Microsoft and Cisco continue to drive the spend into research and development in AI.

This increasing spend has led to disruption across most traditional sectors and this will only intensify as money continues to flow to this area.

However, here in Australia, information technology is the second smallest sector of the sharemarket, representing just 2.8% of the benchmark S&P ASX 200 index.

While small in size, the sector has produced outsized capital returns to investors. The last 52 weeks has seen the sector return 21.9%, compared to the index which has returned 5%.

By overlooking the IT sector, investors are missing out on capitalising on the AI megatrend. In time, AI will impact most parts of the sharemarket, including healthcare, media, entertainment, retail and more.

To gain exposure now – my AI-influenced stock tips are:

Top AI stocks

 Source: IRESS, Bell Direct Research: As at close 24 May 2018

This article first appeared in Money Magazine, 3 July 2018, Print, Page 21