OpenAI, a laboratory that focuses on artificial intelligence and deep learning-based research, has created ChatGPT, a chatbot that can accurately predict stock price movements. Researchers at the University of Florida are backing this up in a new paper showcasing the reliability of large language models.
The team evaluated more than 50,000 headlines from data vendors about stocks listed on the New York Stock Exchange, Nasdaq, and a small-cap exchange. ChatGPT used its advanced language understanding capabilities to analyze and classify the headlines, generating a sentiment score used to compare with the corresponding stock market returns. Results of the evaluation showed a strong correlation between ChatGPT scores and subsequent daily stock returns.
As such, the research group concluded that AI chatbots, like ChatGPT, can be used to provide more reliable sentiment scores than traditional methods, providing a better understanding of market dynamics.
In comparison with traditional sentiment analysis models, ChatGPT outperformed the other methods in terms of stock price prediction. This is especially notable as it puts AI capabilities directly in the hands of the consumer.
In an effort to demonstrate ChatGPT’s capability, a survey conducted by financial comparison site Finder.com tested the AI chatbot against leading UK funds. The selection of 38 stocks chosen by the ChatGPT algorithm yielded a 4.9% growth between March 06 and April 28, compared to the 8% average loss for the funds.
It is predicted that more individuals will begin to use AI for guidance in their financial decisions as the use of machine learning and AI algorithms in asset management continues to increase. In fact, Goldman Sachs estimates that generative AI systems like ChatGPT could result in a 7% increase in global gross domestic product and a 1.5 percentage point lift in productivity growth over the course of ten years.
The progress made by OpenAI with the development of ChatGPT could open the door to greater opportunities and further advances within the tech and finance industries. The combination of AI capabilities and the reach of personal trading could shape the way people handle their financial investments in the future.
