A new study carried out by the US Federal Reserve has revealed the astonishing capability of artificial intelligence chatbot ChatGPT to predict stock price movements upon news headlines. Developed by OpenAI late last year, ChatGPT correctly understood the Federal Reserve comments as either dovish or hawkish, as well as correctly identified which news headlines were favorable for companies’ stocks.
ChatGPT outperformed another Google product called BERT, which evinces the cutting-edge technology embedded in the AI chatbot. The comments tested were cited from 2013 and focused on labor market conditions, which were deemed dovish by ChatGPT as the economy had not yet recovered fully. Upon federal Reserve announcements, one financial analyst remarked that “It’s one of the rare cases where the hype is real.”
In addition, researches conducted another experiment where they asked ChatGPT to interpret large collections of news headlines regarding stocks listed on New York Stock Exchange and Nasdaq. As a financial expert, the chatbot correctly “called” the day-to-day movement of the corresponding stocks nearly all of the time after selecting over 50,000 headlines from October 2022.
University of Florida finance professor Alejandro Lopez-Lira commented that as more people begin trusting such AI-based technology, the markets would become increasingly efficient, consequently reducing the predictability of stock movements. Despite the current success of ChatGPT, he estimates that the accuracy of its predictions will be zero in the next five years.
OpenAI is a technology company specializing in artificial intelligence and deep learning. The team is composed of renowned scientists, engineers, and business leaders, and it provides both research and technology for a broad range of applications, including natural-language understanding and computer vision. The company has earned billets of distinction since its foundation in 2015, not least because of the accomplishments of ChatGPT — a chatbot that has unlocked tremendous capacity in the stock market’s predictions.
Slavi Marinov, the head of machine learning at Man AHL, is among the pioneering few to recognize the potential of ChatGPT. An avid fan of the chatbot, he believes that its development has been remarkable, having “[performed] one of the rare cases where the hype is real.” His enthusiasm perfectly encapsulates the ubiquitous spirit at OpenAI.
