Can AI predict stock prices? University of Florida finance professor Alejandro Lopez-Lira claims that, with the help of OpenAI’s flagship product ChatGPT, it is possible to make accurate predictions based on financial headlines. If successful, the AI chatbot could feasibly turn dull market analysis into a much more profitable undertaking.
Recently, Goldman Sachs asserted that AI is now responsible for up to 35% of financial jobs, so the economic implications of ChatGPT’s ability to forecast stock prices is quite substantial. Lopez-Lira detailed his findings in a study which is yet to be peer-reviewed. He discovered that by analyzing financial news with the AI, returns could be improved.
However, there are several drawbacks to keep in mind. Most importantly, ChatGPT never has to make any calculations itself, as it simply interprets headlines written to humans. Also, language models such as ChatGPT have difficulties with arithmetic, so accuracy could be an issue. Finally, Lopez-Lira admits that returns may be diminished by the increased competition over time, as more people have access to this tool.
OpenAI is an artificial intelligence research laboratory founded by tech mogul and philanthropist Elon Musk in 2015. It has already made a lot of advances in the field of AI, and remains one of the leading players in the industry. Its most iconic product, ChatGPT, is a free chatbot designed to automate various tasks like drafting emails and coding.
Alejandro Lopez-Lira is a finance professor at the University of Florida who specializes in artificial intelligence. In his research, he investigates if LLMs (Large Language Models) like ChatGPT can be used to accurately forecast the direction of stock prices. It is his hope that his findings will bring more people into the profitable practice of AI-assisted stock analysis.
