Can ChatGPT Disrupt the Way We Invest?

Recently, ChatGPT has shaken the roots of Google and emerged as the new King of the internet. As this new AI tool has such great abilities, does it also have the ability to disrupt how we invest today?

Let’s find out. 

What’s Happening?

It’s been just three months since ChatGPT came into existence, and in such a short time, it has left everyone in awe of how extraordinary the AI tool is. 

You would be surprised to know that from writing a realistic and emotional leave application to passing an MBA exam assessed by Wharton School Professor, ChatGPT has successfully achieved it all. 

ChatGPT has surpassed Google Search limits in capturing human intelligence. 

What Exactly is ChatGPT?

ChatGPT is an Artificial Intelligence tool that answers every question you ask. The best part of this tool is that it responds in a tone which feels human. 

So, to experiment further, we asked the tool about itself. So, here is what the tool said, ‘I am an AI that has been trained to understand and respond to natural language prompts. You are free to ask me factual questions’. It does sound human. 

So, ChatGPT was developed by a company named OpenAI, with Elon Musk as one of its investors. Many listed companies are planning to invest in this extraordinary AI tool. Microsoft has announced that it will be investing $10 billion in ChatGPT. Moreover, Infosys was also among the ones who quietly funded ChatGPT in its early stages. 

The company is looking to sell its existing shares in a tender offer that would value it at about $29 billion. This will make OpenAI one of the most valued startups in the world. 

Can ChatGPT Disrupt the Way We Invest?

Let’s have a realistic view of the situation. These days, machine learning and artificial intelligence are taking a massive step in shaping the world. Today we have experienced chatbots replacing human tellers; drones deliver Amazon parcels, and robots comfort humans during bad days. Not just that, we have also seen a massive rise in algorithmic trading. 

According to Business World, after SEBI permitted automated trading in 2008, the number of firms using algorithmic trading has been 50% of the total volume. Moreover, 70-80% of trades are done through algorithmic trading in the US. 

So, it is safe to say that firms rely on AI to a certain extent because AI does not consider emotions. 

When it comes to ChatGPT, firstly, as of now, the platform does not say anything about whether you should invest in a stock or not. Even if it does in the future, it would not be a reliable source. 

Why do we say that?

When conducting fundamental research on a stock and analysing its true worth, a human can assess it better than an AI. For example, if a stock with a strong economic moat falls to its 52-week low, the AI tool might generate a ‘buy more’ signal, while another AI tool might consider it an ‘exit signal’.

So, at the end of the day, AI-based tools are excellent for generating data in a simplified way (just like how screener and investing.com help us at times). But, investing in this data based on no proper research can lead you to losses. 

The bottom line is that even if, in the future, ChatGPT evolves to tell us if we should invest in a stock or not, it would still be a recommendation given by an AI tool. After taking the recommendation, conducting due diligence on our part is a must before investing. 

*Companies mentioned in the article are for informational purposes. This is not an investment advice.

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