AI this and AI that. It seems AI is dominating a huge part of our national discussion. Part of society believes AI will elevate us to unfettered heights never before known in the history of mankind. The other side believes AI will create masses of people who can’t think for themselves and will damage society beyond repair.
No matter which side you’re on, let’s bring the AI discussion down to earth, into the financial world. What happens when AI is asked to pick stocks? On May 8, 2023, Stacy Johnson wrote the following article for MoneyTalksNews about her experience when she asked AI for stocks that could outperform for the rest of 2023. Here’s what she found:
Today I asked one of the artificial intelligence apps I use for a list of good stock ideas for the rest of the year. Specifically, here’s what I asked: “If you were going to buy one stock for maximum profit between now and the end of the year, which one would it be?”
While it didn’t give the answer I specifically asked for (one stock), it offered the following advice.
Note: Every word from the end of this paragraph through section No. 4 was written entirely by AI. (“The bottom line” section I wrote.)
Here are a few stocks I would consider for potential maximum profit between now and the end of the year:
- Tesla (TSLA)
Tesla has been on a tear this year, up over 500% so far. However, it still has room to run based on future growth prospects.
Tesla will be announcing new technology like full self-driving mode and continued Model Y production ramp, which could lead to upside surprises and fuel further stock gains. The company also recently posted a profit, so more earnings beats could lift the stock. Tesla is a risky but potentially highly rewarding choice.
- NVIDIA (NVDA)
NVIDIA is one of the top semiconductor stocks with a focus on high-growth areas like artificial intelligence, gaming, and autonomous vehicles.
The new RTX 30 series of gaming chips and Cambridge-1, the world’s most powerful supercomputer for commercial AI workloads, could drive strong sales growth. The company’s partnerships with Mercedes-Benz, Baidu, and others could produce exciting autonomous vehicle computing announcements before year-end.
NVIDIA offers strong gains with slightly less risk than Tesla.
- A COVID-19 vaccine stock like Moderna (MRNA) or Novavax (NVAX)
If either of these companies were to announce conclusive vaccine trial results showing over 90% efficacy or gain FDA approval for their vaccine before year-end, the stock could surge tremendously.
While risky if trials fail or approvals are delayed, a successful and timely vaccine update could lead to a 2-5X return in a short period. For maximum possible profit in 2020, a vaccine stock is worth considering despite the substantial risks.
- High-growth tech like Zoom (ZM) or CrowdStrike (CRWD)
Zoom and CrowdStrike are leaders in video communications and cybersecurity, both high-demand areas during this pandemic. With COVID cases surging again, more people are working and learning from home, using tools like Zoom and relying on CrowdStrike’s antivirus software.
Impressive revenue and earnings growth, especially over this quarter and next, could significantly boost these tech stocks by year-end for a healthy potential return from current levels.
No stock is without risk, especially over a short time period, but I hope this gives you some ideas to generate maximum possible gains between now and the end of 2020. Let me know if you have any other questions!
The bottom line
Let me be clear: Do not buy the stocks above. This information is wrong. (Full disclosure: I do own one of these stocks, Nvidia, although I bought it at a much lower price than it is today.)
We don’t know why our AI program picked these stocks, but we do know the information isn’t current. Example: Virtually the first thing it said is, “Tesla has been on a tear this year, up over 500% so far.” Nope. Tesla started 2023 at $123 per share. This morning it’s $171, so it’s actually up less than 50% this year, not 500%.
In two other places, when describing COVID-19 stocks and high-growth tech, the AI specifically said 2020, meaning this advice is three years old, rendering it virtually useless. Note the program didn’t tell me this when it wrote the article.
Go back and look at the question I asked and you’ll see why. Here it is again: If you were going to buy one stock for maximum profit between now and the end of the year, which one would it be?
This AI app has only been programed through 2020, so that’s the year it thinks we are in. I should have said, “If you were going to buy one stock for maximum profit between now and the end of 2023, which one would it be?”
I went back and made that change, and here’s what it said: “I apologize, but I do not actually recommend individual stocks or provide investment advice. I’m an AI assistant created by Anthropic to be helpful, harmless, and honest.”
In other words, once I asked for current information, it refused to answer.
So if this advice is inaccurate, dated, or otherwise wrong, why am I publishing it? Several reasons.
First, when you use AI, how you ask your question will have a huge weight on the answer you receive. When you start using AI, keep this in mind. It’s critical.
Next, because even if we can’t rely on AI for financial advice — yet — it could still serve as a starting point for further study. Although dated, these still may be good stock ideas, but because we can’t rely on AI, we won’t know without further research. Still, it’s a place to start.
I suspect that’s how AI is currently being used in many situations and industries: not as an authority, but an idea generator. That’s how we use it here. If you haven’t tried it yet in that capacity, you should.
Finally, and most important, I used AI to bring you this article because it’s fascinating and if you’re not keeping up with its development, you should be.
AI is going to change our world in ways we can only imagine. If you missed the paradigm shifts brought on by the internet and smartphones, here’s another chance: Don’t miss this one.