The biggest theme of 2023 is easily the emergence of artificial intelligence. It’s a little strange since AI in various forms, such as Alexa, has been around for years, but it’s really the development of ChatGPT that has put imaginations into motion. From an investing perspective, Nvidia (NASDAQ:NVDA) has perhaps been the biggest beneficiary. Its stock price has nearly tripled in just the first half of the year. Obviously, investors believe it will be a big winner in the AI revolution, but it’s unlikely to be the only one.

The global artificial intelligence market Is expected to grow between 35%-40% annually over the next decade.

There are going to be several ways to approach investing in this space.

Do you go with the big industry names that have a lot of money to spend on development or do you go with the smaller, emerging names that have some solutions in place? Do you go with the “picks and shovels” names? Which segment of the market could do the best?

AI can be broadly broken down into three segments — software, hardware, and services.

Right now, software has captured the largest share of the overall market simply because we’re in the nascent stages of this trend. Solution providers, including Google (NASDAQ:GOOG, NASDAQ:GOOGL) and International Business Machines (NYSE:IBM), are still building out their roster of products and are expected to be involved in multiple areas of the economy, including advertising, media, and healthcare.

The big chip companies are driving the hardware side and will continue to do so. These businesses need to build up the infrastructure to handle the data storage requirements and computing power necessary to make AI better over time.

AI Stocks: The Best Way to Invest in Artificial Intelligence

The market currently looks like a lot of emerging industries. There are a handful of heavyweights that dominate the space along with a lot of tinier, fast-growing names trying to break in. In terms of investing, the small companies offer the greatest potential, but there are also a lot of them that are going to fail along the way. This is why a broad basket exchange-traded fund (ETF) may make the most sense since it’s more of a bet on the industry instead of the potential winners. Like artificial intelligence itself, there are very few pure-play options on AI within the fund industry.

AI probably ends up looking like several technologies before it. The big names, such as Microsoft (NASDAQ:MSFT), Nvidia, and Google, have the financial means to simply gobble up any potential competitors through M&A. It’s often easier to buy someone else’s technology than developing your own, and I suspect we’ll see some of that in AI as well.

In the end, the stocks most likely to emerge as the longer-term winners in AI are probably those three mega-caps. They easily have the largest degree of resources to throw at AI and can potentially drive away any competitors that pose a challenge. For now, they provide ancillary exposure to AI as it’s just a small part of their overall business, but it’ll continue to grow more influential over the coming years.

On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.