If you've been on the internet in recent months, you've likely heard of ChatGPT – you might even be a user. Hundreds of millions of people have already employed the artificial intelligence (AI) chatbot to write essays, create artwork, or even to act as a companion.
But can AI technology help investors identify ASX shares to buy? Let's take a look.
The role of AI in the investing world
Using AI as a tool when looking to buy ASX shares is hardly new. Indeed, robo-advisors have been around for years, utilising AI or algorithms to offer investment advice or services.
Generally, automated advisors come at a significantly lower cost than traditional financial advice. Some even have decent track records of building wealth.
Of course, some of ChatGPT's features might be leaving such AI-driven advisors in the dust. However, as we review below, the chatbot's stock-picking abilities may not yet stand up to scrutiny.
Can ChatGPT be used to identify ASX shares worth buying?
As users have discovered, ChatGPT can find and process vast quantities of data, translating it into understandable, conversational text. In doing so, it can feasibly identify patterns and trends that could take humans hours or days to discern.
It's no wonder, then, that some investors have attempted to use the technology to find ASX shares worth buying. However, its use in the investing field appears to be limited. That's apparently because of the inevitable 'groupthink' built into the platform.
When putting the AI bot to the test earlier this month, The Motley Fool Australia's chief investment officer Scott Phillips found it could not discern companies with truly competitive advantages from those that simply boasted such qualities. Phillips wrote:
Because it uses public information, and everyone describes their company as having one [a competitive advantage], AI just tells us what it's found.
Such complaints are relatively tame when compared to other issues that could arise when using the software to find ASX shares to buy. Writing for ASX Ltd (ASX: ASX)'s blog last month, Australian Shareholders' Association CEO Rachel Waterhouse commented:
Without human intuition, judgement, and creativity, it is arguable that the platform will not be able to differentiate between information and misinformation, even if it is happy to tell you otherwise.
Not to mention, the information available to ChatGPT is currently limited to that existing as of September 2021.
To put that into context for ASX fans, in September 2021, Afterpay had yet to be acquired by Block Inc (ASX: SQ2), Allkem Ltd (ASX: AKE) was not yet born from the merger of Orocobre and Galaxy Resources, and Zip Co Ltd (ASX: ZIP) shares were still trading above $6.50 – more than 1,000% higher than an investor could buy them for today.
AI could be the future of stock picking
Having said that, it is possible that using AI to buy ASX shares might become the norm in the future.
Bloomberg, for one, is developing a large-scale generative AI model, to be called BloombergGPT. The technology is being developed specifically for use in the financial domain.
Not to mention, JPMorgan Chase appears to be developing its own ChatGPT-like software that could see ordinary investors using the technology for stock picking, CNBC reported last week.