Many investors interested in new technologies wonder how to invest in artificial intelligence. Here’s how AI works—and how to profit from it.

We think we are on the verge of a technology-fuelled economic boom. It may outdo all previous booms. It’s likely to surprise most people with how long it lasts and the prosperity it generates around the globe.

Are you interested in how to invest in artificial intelligence? Although we feel strongly that technology will enhance economic growth for many years to come, we also think many people today overestimate the potential of artificial intelligence (AI, as it’s called), in particular.

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How to invest in artificial intelligence: the background every investor should know

Computers beat humans at games like chess because those games are inherently digital—there’s no better word. In a chess game, only a relative handful of moves exist at any one time. After each move, new possibilities come to light, but they all follow the same basic rules.

AI has an advantage over human intelligence in chess, because it has the data storage and computing power to look further into the future, based on all possible situations that follow each move on the chessboard. But that advantage is pretty much limited to highly specialized situations, with a limited number of rules and moving parts—like a chess game.

In real life, human intelligence has the advantage. After all, human intelligence works with analogies as well as digits. Human accomplishment rises out of learning the rules in a variety of situations, over the course of decades, then applying those rules in different situations, often totally unrelated. Much of this learning takes place subconsciously, but it’s there when you need it. For that matter, high IQ alone is no guarantee of achievement (although it helps if you want to excel at chess). Human achievement also requires emotional intelligence and intuition. Science has a long, long way to go before we reach the proverbial Singularity—when AI catches up with human intelligence. Before that happens, we suspect we’ll be breeding dogs that talk.

This is obviously our opinion, and nobody can predict the future. However, one reliable sign that an investment idea is overblown it that its fans treat it as a sure thing. That’s where AI stands today. AI fans don’t exhibit a shred of doubt that AI is coming soon. They feel it’s a waste of effort to question its inevitability.

Our view is that if AI-verging-on-human-intelligence is coming, it will appear gradually, and in stages. Some of today’s AI start-ups may evolve into profitable companies. But the biggest winners from AI will be those companies, now in the middle of the risk spectrum, who use AI to find better ways to serve their human customers.

How to invest in artificial intelligence: More on how AI works

Artificial intelligence is essentially the merging of today’s big computing with big data.

The highest form of AI, known as “deep learning,” involves inundating a powerful computer system with labelled information, and waiting for it to make connections, and categorize and sort data. In theory, it can then put new data in context using that information. Such a model is designed to replicate, to a lesser extent, the connectivity of the human brain.

This has resulted in breakthroughs in everything from creating machines that can recognize faces with more accuracy than a human, to building cars capable of driving themselves.

Some of the most practical advances have been made in relation to speech. Voice recognition is still far from perfect, but millions of people are now using it—think Siri, Alexa, and Google Assistant.

Machines have already beaten the finest (human) players of poker and Go—achievements that experts had predicted would take at least another decade. Google’s DeepMind team has used AI systems to improve the cooling efficiency at data centres by more than 15%, even after they were optimized by human experts.

AI is being used by the cybersecurity companies to detect viruses and malware, and by PayPal to prevent money laundering.

Computers with artificial intelligence can improve over time using different algorithms (a set of rules or processes), as they are fed more data. AI machines learn by recognizing trends in data that allow them to make decisions. For example, designing autonomous vehicles involves building machines that learn to navigate. A system may use pattern recognition algorithms from which it learns, for instance, to identify pedestrians from vehicles from animals. That signals to the car when to brake if it encounters a cat or a zebra, even if it has never encountered the latter.

How to invest in artificial intelligence: Here are some lower-risk ways to do it

We think that the best way to invest in AI is through companies that already have a sound base of profitable business. Here are five companies that are taking the lead in AI today:

Microsoft (symbol MSFT on Nasdaq), for example, is putting to use the biggest library of AI patents in the world.

Cisco (symbol CSCO on Nasdaq) produces voice recognition AI that works across all apps and devices; the tech company has also developed AI-protected network security.

AI chips by Intel (symbol INTC on Nasdaq) already power Google’s self-driving cars.

The Watson supercomputer by IBM (symbol IBM on New York) can analyze the vast amounts of data needed for even the most complex AI.

Symantec (symbol SYMC on Nasdaq) is a global pioneer in AI to ferret out potential cyberattacks from a maze of Internet traffic.

Are there other tech companies working on AI that you think would make a good investment?