Polymarket Is Fun, but Here's Where You Should Really Put Your Money in AI
Key Points
Polymarket is an exciting product, but prediction markets border on gambling.
The infrastructure build-out to support artificial intelligence is concrete and easy to invest in.
Polymarket lets you predict what could happen in the future, which, on a collective level, makes it a powerful tool. However, that doesn't mean that prediction markets are investments. If you are looking for investment ideas, the artificial intelligence (AI) build-out is a much better place to put your cash to work.
What does Polymarket do?
Polymarket allows users to predict the outcome of a binary event. Those predictions can be around just about anything, from sports events to political contests to the weather. If your prediction is correct, you make money; if your prediction is wrong, you don't.
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There is value in users' collective prediction decisions because real money is at risk. However, the binary nature of the outcome means that prediction markets are more like gambling than investing, even though brokerages like Robinhood (NASDAQ: HOOD) offer access. Notably, unlike a stock, you get no intrinsic value when you put money in a prediction market. Investors should be focusing on buying real businesses.
The AI build-out is real and ongoing
Artificial intelligence is just as exciting as prediction markets and looks destined to change society in dramatic ways. You can easily invest in companies that are supporting the adoption of AI. That allows you to be a part of something big and to build wealth along the way. Two strong options today aren't direct AI plays, but rather picks-and-shovels providers supporting the AI build-out.
Brookfield Renewable Partners (NYSE: BEP) is a globally diversified clean energy company with exposure to hydroelectric, solar, wind, and nuclear power, as well as energy storage. It already has large deals with Microsoft (NASDAQ: MSFT) and Google, providing the power they need to support their data center buildouts. The big story here, however, is the attractive 5.1% yield, backed by a growing distribution. Management's goal is to increase the distribution by 5% to 9% a year.
Another way to play the AI build-out is to buy data center owner Digital Realty (NYSE: DLR). This real estate investment trust (REIT) owns more than 300 data centers worldwide. The company expects AI to be a significant demand driver, helping to grow data center demand by 2.7x between 2025 and 2030. Digital Realty believes it currently has the ability to more than double its own in-place capacity. And it offers a 2.7% yield backed by a growing dividend.
Get your thrills and own something, too
Putting money into a prediction market is a dopamine hit, but it isn't an investment. If you want some excitement without venturing into the gambling arena, you should shift your attention to AI. This hot technology is growing fast, and you can get directly involved with investments like Brookfield Renewable and Digital Realty. And they'll both pay you reliable cash dividends along the way.
Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Digital Realty Trust and Microsoft. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.