How To Invest In Perplexity AI In 2024? And Is It Safe?

Perplexity is a smart computer program that’s good at finding information for you. It’s like a different kind of search engine. Instead of typing in keywords, you can talk to it like you’re talking to a person. And the cool thing is, it gets better at understanding what you like the more you use it.

Similar, to AI firms Perplexity has attracted the attention of investors. In March 2024 the company reached a value of $520 million during its recent funding round. Now let’s delve into Perplexity AI. We will explore how to invest in perplexity AI and whether is it profitable to invest in perplexity AI. What is the future of perplexity AI or is there any risk to invest in?

Is perplexity AI available for public trading?

No, Perplexity isn’t available for public trading right now. It’s a pretty new company, started by Andy Konwinski, Denis Yarats, Johnny Ho, and Aravind Srinivas in August 2022.

Srinivas used to work at OpenAI, the top dog in generative AI, and now he’s the CEO of Perplexity. For funding the company has three rounds. But usually, it takes a few years for companies, even the really good ones, to become publicly traded after they start.

When is public trading available for perplexity AI?

Right now, there’s no news about Perplexity planning to become a public company. Some sources say they might soon get more funding that would value them at over $1 billion, which would make them a unicorn—a term for startups worth a ton of money.

Since Perplexity started just in 2022, it’ll probably be a few more years before they go public, even if everything goes perfectly for them. Except for the dot-com boom, when companies rushed to go public because investors couldn’t get enough of internet businesses, most tech companies took several years to go public.

For example, Alphabet, which used to be Google, took six years to go from starting in 1998 to going public in 2004. And Meta Platforms, which was Facebook back then, took eight years to go public from its start in 2004.

After the dot-com busts, investors are more careful with IPOs. They want to see that a company is growing and making money, and they want proof that the AI craze isn’t just a passing trend. It’ll probably take Perplexity a few more years to show that they meet those expectations.

How can you buy Perplexity stock?

Since you can’t buy Perplexity stock directly because it’s not publicly traded, there are still ways for investors to invest in it. One way is by investing through a venture capital firm or by buying shares through employee stock purchase programs.

However, these options usually require you to be an accredited investor with a lot of money. A simpler way is to invest in stocks of companies that already own shares of Perplexity.

Step 1: Open a brokerage account

To invest in these stocks, you’ll need to open a brokerage account that lets you buy and sell stocks. There are many brokerage options available, like Charles Schwab, Fidelity, Robinhood, and E-Trade.

Step 2: Set your budget

After setting up your brokerage account, the next step is figuring out how much money you’re comfortable investing. Consider your income, assets, and what you think about the investment. If you’re sure about it, you might want to put more of your money into it.

Remember, it’s smart to spread out your investments. A general rule is to not put more than 10% of all your investments into one stock.

Step 3: Research

Now it’s time to do some digging. Learn all you can about the investment—what it’s good at, where it might struggle, and what risks are involved. It helps to write down your thoughts, including what could make you change your mind or when you’d decide to buy the stock.

Right now, only one company that’s publicly traded owns shares of Perplexity, and that’s Nvidia. Nvidia is a big player with a market cap of over $2 trillion, while its stake in Perplexity is probably worth just a few million dollars. So, if you invest in Nvidia, you’re only getting a small piece of Perplexity.

However, investing in Nvidia might still be a good idea. Nvidia is the top player when it comes to AI hardware, and teaming up with Perplexity could boost Nvidia even more. There’s also a chance that Nvidia might want to buy Perplexity.

Step 4: Place your order

Once you’ve set up your brokerage account, figured out your budget, and done your research, it’s time to place your order. There are mainly two types of orders: market orders and limit orders.

With a market order, you buy or sell at the current market price. Using a limit order, you can set a specific price you’re willing to pay or accept. This gives you more control over the transaction.

A limit order gives you control over the price, while a market order is usually quicker to execute. The Motley Fool usually suggests using a market order.

Is Perplexity making money?

Perplexity is still in its early days, having been around for only 20 months and just beginning to bring in revenue. As of January 2024, it wasn’t profitable, with annual revenue of less than $10 million. Tech companies often focus on growing their market share first and worry about making a profit later, and Perplexity seems to be following that trend.

Perplexity is aiming to shake up the search industry dominated by Google, which means it’s targeting a huge market. The company is likely to keep investing in improving its product, expanding its computing power, and promoting itself to attract more customers. Profitability isn’t the main goal right now.

Should you invest in Perplexity? How to invest in perplexity AI

Because Perplexity is so new, it’s hard to judge it based on its financial performance. Right now, its revenue is relatively small compared to its valuation, so traditional financial metrics don’t give a clear picture. Instead, investors should consider its potential for growth and its ability to seize the market opportunity it’s chasing.

According to BrightEdge, a leader in AI search marketing, Perplexity’s organic search share is growing by 39% each month, which translates to a several hundred percent annual growth rate. Perplexity also claimed to have 10 million monthly active users as of January, although only a small portion of them are paying customers.

One promising sign is the list of investors who have already put money into Perplexity. It includes heavyweights from the tech industry like Jeff Bezos from Amazon, Tobi Lutke from Shopify, and Susan Wojcicki, the former CEO of YouTube.

Investing in Perplexity isn’t automatically a smart move just because big names like Bezos and Lutke support it. However, their backing adds to Perplexity’s appeal and suggests it’s seen as valuable.

But, keep in mind, investing in Perplexity is risky. It’s still a small company, and there’s no guarantee it’ll succeed. If you do decide to invest, it’s wise to start with a small amount, considering its potential for significant growth.

ETFs with Perplexity Exposure

Since Perplexity isn’t publicly traded, there aren’t any exchange-traded funds (ETFs) directly linked to it. However, since Nvidia has invested in Perplexity, you can indirectly invest in it through ETFs that hold Nvidia.

You could opt for a broad index fund like the Vanguard 500 Fund or the Invesco QQQ Trust, both of which include Nvidia. Or, for more specific exposure, consider the Van Eck Semiconductor ETF, which focuses on semiconductor companies like Nvidia, and therefore, Perplexity indirectly.

Though investing in these ETFs will give you some connection to Perplexity, it’ll be minimal due to its small size. Alternatively, you might explore AI ETFs, which include AI-related stocks like Nvidia, although they don’t directly include privately held companies like Perplexity.

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Conclusion

Perplexity stands out among today’s AI startups as one of the most promising. While it may lack the widespread recognition of ChatGPT or Google’s Gemini, Perplexity holds a leading position in a unique and valuable corner of AI chat. With its potential to convince users that it offers a superior alternative to Google Search, the company has significant growth prospects.

For potential investors, it’s unlikely that Perplexity will go public soon, given its current stage of development and revenue. However, it’s worth keeping an eye on due to its disruptive potential and the high-profile investors it has attracted, indicating strong support from the tech community.

Frequent Asked Questions (FAQ’s)

How to purchase AI stock?

For those just starting in stock trading and keen on investing in AI stocks, the initial action involves opening a brokerage account. Once that’s done, the next task is to determine the level of AI stock exposure desired.

How much perplexity AI to invest in?

Perplexity Free offers a complete set of standard features such as AI search functionality, multimedia support, and beyond.

The names who invested in Perplexity AI?

In addition, it was disclosed that the company secured $73.6 million in funding from a mix of venture capitalists, corporations like Nvidia, assorted angel investors, and Jeff Bezos through his Bezos Expeditions Fund. This funding round pegged the valuation of Perplexity at approximately $520 million.

Is it profitable to invest in AI?

The surge in AI stocks reflects investor response to indications of an impending prolonged growth phase in technology demand. Since the onset of 2023, stocks associated with AI have outperformed both U.S. and global indexes, delivering returns that are 30% higher.