How to Invest in Project Omega

Want to know how to invest in Project Omega? Take a number and join the rest of us who are wondering about the rumored project that may (or may not) involve supercharged artificial intelligence, breakthrough renewable energy technologies, and Elon Musk. Read on to find out what we know about Project Omega.

Overview

What is Project Omega?

Investors who want to know how to invest in Project Omega might consider getting a little more information before putting money into the venture. For one thing, we might want to find out if the venture that combines artificial intelligence, renewable energy, and Elon Musk is even real -- and so far, Musk isn't talking.

Although much of the gossip about Project Omega -- and that's what it is, gossip -- is vague, the focus on artificial intelligence and renewable energy is catnip for investors who see the pair as two of the hottest secular trends in business.

Add the founder of PayPal (PYPL -0.16%), Tesla (TSLA 0.03%), SpaceX, Neuralink, xAI, and The Boring Company into the mix, and you’ve got the ingredients for an earth-shaking initial public offering (IPO). Again, though, not only is Project Omega absent from IPO calendars, but we're also not even sure if it's a real venture.

How to invest

Investing in Project Omega

However, for the sake of argument, let's say that you think Project Omega is real and that Musk is behind a world-changing fusion of artificial intelligence and renewable energy. How would you best position yourself to profit from a company that hasn't gone public?

Accredited investors (i.e., high-net-worth individuals) could, theoretically, invest in Project Omega before a public offering through a secondary marketplace like Forge Global (FRGE 5.26%) or Hiive. However, this assumes that (a) the venture will need outside investors and (b) the project actually exists.

Meanwhile, less-affluent retail investors might be able to get a piece of the theoretical action by putting money into the Ark Venture Fund (NASDAQMUTFUND:ARKV.X) managed by Cathie Wood. Although the fund wouldn't be guaranteed to have money in a Project Omega venture, it's worth noting that it has shares of xAI, as well as pieces of OpenAI and Anthropic, none of which are currently traded. And while its management fee is an astronomical 2.75% annually, it's possible to buy into the fund with only a $500 investment.

Another indirect path to profiting from Project Omega, however, may lie in well-known companies that already offer publicly traded stock and focus on either artificial intelligence or renewable energy. Here are three that fit the bill:

Tesla

Tesla, founded by Musk, is a logical candidate for people who'd like to invest in Project Omega. While the company generally gets kudos for dominating the electric vehicle market, an often-overlooked part of Tesla's business includes utility-scale storage options, such as the Tesla Megapack that's been adopted by utilities to ensure power flows smoothly through the electric grid. A rising tide generally lifts all boats, and if Musk is indeed part of a Project Omega rollout, other ventures of his are likely to benefit.

Nvidia

Nvidia (NVDA -1.3%) has almost single-handedly emerged as the winner of an AI revolution, becoming the largest company in the world by market capitalization in mid-June 2024. The company's graphic processing units are essential to virtually all AI applications since they can perform millions of operations at the same time, making them perfect for machine learning. Stocks that go up generally must go down, but Nvidia stock shows few if any signs of retreating soon.

Xcel Energy

Xcel Energy (XEL -0.07%) didn't enjoy a spectacular 2023, and a few of its fundamentals -- a 3.99% dividend that's not well-covered by its cash flow -- may raise a few red flags for investors. Long-term, however, the utility that serves customers from Texas to Wisconsin is poised for a breakout as the need surges for upgraded electric transmission lines to accommodate renewable energy sources such as solar and wind farms.

Here's how to invest in one of the three companies:

Step 1: Open a brokerage account

You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take the time to research the brokers to find the best one for you.

Step 2: Figure out your budget

Before making your first trade, you'll need to determine a budget for how much money you want to invest. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.

That might seem like a daunting task for those starting out. However, you don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across around 10 stocks and then grow from there.

Step 3: Research related companies

It's essential to thoroughly research a company before buying its shares. You should learn how it makes money and study its balance sheet and other factors to ensure you have a solid grasp on whether the company can grow value for its shareholders over the long term. You should also research related companies.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock and its competitors, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill in all the relevant information, including:

• The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
• The stock ticker (TSLA for Tesla, NVDA for Nvidia, and XEL for Xcel Energy).
• Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order because it guarantees you buy shares immediately at the current market price.

Once you complete the order page, click to submit your trade and become a shareholder in one of these leading AI or renewable energy companies. Investors would follow a similar process to buy an IPO stock like Project Omega if and when it goes public. Once shares become available, fill out your brokerage account's order page with the company's selected stock ticker and submit your trade.

ETFs

ETFs with possible exposure to Project Omega

Another option for investing in a theoretical Project Omega involves much less research. Putting money into an exchange-traded fund (ETF) isn't just a way to profit from a booming sector; it's also a time-proven method for portfolio diversification.

Even if one or two stocks in your ETF basket crater, there are more that can theoretically offset losses. And while you might not enjoy life-changing results from the success of a single stock, passive investing has been proven over and over to significantly reduce risk.

Here are five ETFs that might benefit from Project Omega:

iShares Global Clean Energy ETF (ICLN 0.26%). It's been a rough few years for many renewable energy-focused funds. The ICLN fund had fallen almost 10.4% for the year by the end of the first quarter of 2024, but it still held almost $2.4 billion in assets under management (AUM). Its modest yield of 1.23% may be partially offset by a reasonable expense ratio of 0.40%.

Despite its recent lackluster performance, ICLN is poised for a boom in spending on renewables. The largest five of its 101 stocks make up more than one-third of its total holdings and are focused on the electricity sector. Its top holdings include First Solar (FSLR 0.39%), making up 10.73% of the fund; Enphase Energy (ENPH 1.79%), accounting for 8.04%; Iberdrola SA (IBDSF -0.72%) (IBDRY -0.74%), which has 6.18% of assets; Vestas Wind Systems (VWSY.F -5.15%), accounting for 5.65% of assets; and Consolidated Edison (ED -0.3%), which makes up 5.64% of the fund.

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN 0.46%). Like the iShares fund, the ETF had a rocky first half of 2024, posting a 23.39% loss by the end of April. The fund, which held a little more than $785 million in net assets through the first half of the year, posted a 1.2% dividend yield on a 0.59% expense ratio.

Also like the iShares fund, the First Trust ETF's top holdings included First Solar (12.89%) and Enphase Energy (7.76%). The top holdings then diverged, with ON Semiconductor (ON -0.01%) making up 6.84%; Tesla accounting for 6.56%, and Albemarle Corp. (ALB -3.41%) at 6.12% rounding out its top five stocks.

The Global X Robotics and Artificial Intelligence ETF (BOTZ -0.01%) is a behemoth in AI and robotics ETFs, with $2.74 billion in assets. Even with a 0.68% expense ratio and no dividend yield reported, the fund has posted an 11.46% return through the first quarter of 2024.

The fund's top holding is Nvidia, which makes up 12.27% of assets. The chipmaker giant is trailed by ABB Ltd. (ABBN.Y 0.28%), accounting for 9.77% of holdings; Intuitive Surgical (ISRG 0.3%) at 8.71%; Japanese conglomerate Keyence (KYCCF -0.81%), making up 7.62% of its stock holdings; and SMC Corp. (SMCA.Y -0.22%), a Japanese manufacturing company that accounts for 6.56% of fund assets.

The Robo Global Robotics and Automation Index ETF (ROBO 0.48%) is another potential fund whose fortunes could intersect with Project Omega. The $1.25 billion fund charges a steep 0.95% expense ratio for a tiny 0.05% yield, but its performance for the year to date -- a 1.75% loss -- may be deceiving, given that it holds 77 different stocks, none of which constitute more than 2.28% of its net assets.

The fund's top holding is automatic test system developer Teradyne (TER 0.77%), followed by Nvidia, which makes up 2.13% of the ETF holdings; Intuitive Surgical, which accounts for 1.96%; Kardex Holding (KRDXF -6.88%), at 1.91%; and Zebra Technologies Corp. (ZBRA -0.13%), making up 1.86% of the fund.

The Destiny Tech100 (DXYZ 33.8%) is one of a few funds that let their investors put money into companies that typically only get monetary love from private equity and venture capital firms. The closed-end fund, which was only listed on the New York Stock Exchange (NYSE) in January 2024, has almost two dozen holdings, including off-the-exchange investments in SpaceX (36.6% of its portfolio), Epic Games (3.8%), and OpenAI (3.6%).

Before rushing in with your money, however, you should keep several things in mind: First, the ETF is a closed-end fund, which means it limits the amount of shares that it sells. Second, several of its holdings, such as Instacart (CART -1.12%), which accounts for 3% of assets, had relatively recent IPOs and have slumped in value since the initial excitement. Finally, the net asset value of the fund's holdings was $52.6 million at the start of 2024, but its market cap was about $363 million. Do the math, and you'll see that the value of the portfolio would need to increase by a factor of 6.9 before investors who bought into the fund right away will see a profit.

Still, if your risk tolerance is reasonably high and you see the ETF as an opportunity for portfolio diversification, the Destiny Tech100 fund may be an interesting (if somewhat risky) holding.

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Bottom line on Project Omega

A fusion of artificial intelligence and renewable energy created by one of the top entrepreneurs of the 21st century has the potential to send investors into a frenzy. With few exceptions, Musk has an unrivaled track record when it comes to developing businesses on the cutting edge of technology. Even so, two caveats bear repeating: We don't know if any of this is real, and if something sounds too good to be true, it usually is too good to be true.

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