Transform Your Investment Strategy with AI

For the past couple of years, it seems like every other day brings news of AI’s latest breakthrough, transformative impact, or emerging potential in yet another industry. Yet, one area where AI is yet to make a meaningful mark is investing.

This is largely because traditional analytical methods have already been highly advanced, leaving little room for disruption. But the wait might finally be over. With the evolution of AI models and a new wave of startups exploring innovative applications of AI, the technology is poised to open a new frontier in investing.

This article will review how large language models (LLMs), the most prominent form of AI models, fare in investment analysis. The article also discusses some AI applications that specialize in supporting investment decision-making. Read on to know more!

Are LLMs good for optimizing investment strategies?

Large language models (LLMs) and LLM-based applications provide mixed results as tools for optimizing investment strategies. Let us review four ways in which such applications can be used for improving investment strategies:

Sounding boards

If used correctly, LLMs can be excellent sounding boards. You could suggest investing ideas to an LLM and ask the LLM to expose vulnerabilities. When you create this prompt, the LLM will not only expose blind spots and logical fallacies but also provide suggestions to improve and refine the investment idea.

Let’s review this AI capability with an example.

In April, the S&P 500 Energy index dropped sharply amid tariff tensions. Since then, the index has been recovering steadily but hasn’t reached March levels. This may give you the idea that now might be a good time to buy energy stocks at low prices and wait for the price to pick up.

When we presented this idea to ChatGPT, we got the following response.

As you can see, ChatGPT has turned a raw idea into a starting point for an investment strategy. Its response lists risk factors and also defines how the strategy should be executed. It concludes its analysis by stating how risky the strategy is and by summarizing the suggested execution plan.

Note: This is an example shared to throw light on AI capabilities. Please do not interpret this as investment advice.

Parsing through large documents

You can use AI to chat with your PDFs. You need to upload the document and wait for the AI to process it, and then you can begin asking questions about the document’s contents. This feature can be useful when the document you wish to read has hundreds of pages and traditional search features are not yielding the desired results.

When we uploaded a 23-page report to PDF.ai and asked it to list the biggest investment opportunities and related risk factors mentioned in the report, this is the response we received within seconds:

A helpful feature of such an LLM application is that it will list the pages from which it got the information. This makes it easy to review the accuracy of the response.

Data analysis

Another helpful feature of LLMs is their data analysis capabilities. LLMs are capable of performing data analysis, helping you write code to interpret and analyze data, and helping you build a spreadsheet model for the same.

One LLM-based application that is widely used in data analysis is Julius AI. When you upload S&P 500 Energy’s historical data to this application and ask it to review the price trends, you will get the following response:

If a beginner had to perform such an analysis, it would take them hours to come up with a comparable result. However, Julius AI was able to deliver these insights within minutes.

Research

Of late, there’s a general consensus that search engines have become worse. Often, the website with the best SEO shows up first in search results, while the website with the most relevance and knowledge to offer is not even listed on the first result page. LLMs with web access improve on this weakness by understanding the intent behind the query and then looking for relevant results.

This capability of LLMs can substantially reduce the time spent looking for information while establishing investment strategies.

Suppose you wish to invest responsibly in companies that either do not harm the environment or directly work towards eliminating negative environmental changes. After some research, you shortlisted two ETFs that would be perfect for this investment approach: ProShares S&P Kensho Cleantech ETF and SPDR MSCI USA Climate Paris Aligned ETF. However, due to the small size of these ETFs, you may not find any articles that cover these two ETFs in detail via search engines.

When you ask ChatGPT to find the required articles for you, you will get the following response:

While ChatGPT was unable to find an article that compared the two ETFs, it was able to find articles that covered these ETFs individually. This can be a great starting point for further research into the two ETFs.

Limitations of LLMs

Even today, LLMs are not perfect and are prone to hallucinations. This phenomenon occurs when the LLM presents false or nonsensical information as truth. In the past, users have reported that AI-generated sources were created when they were unable to find data to support their claims.

Also, the data analysis capabilities of most general-use LLMs are not perfect. Often, these LLMs can make counting mistakes, apply the wrong formula, or intentionally misinterpret data to deliver a satisfactory message.

Such limitations can be destructive from an investor’s perspective. Hence, you must be mindful when using AI and verify the facts yourself before acting on AI recommendations.

Specialized AI tools for investment analysis

Some leading investment tools that leverage AI are as follows:

Magnifi

Magnifi describes itself as a copilot for investing. It is meant to support financial planning, portfolio management, and investment-related research. The AI serves as an investment search engine that can provide data tailored to your investment research needs. Their platform also includes interactive planning tools. They also offer a personality engine that tailors investment recommendations to match your unique personality, alongside your growth goals and risk tolerance. Magnifi also functions as a commission-free broker. If you have existing investing accounts, you can link them to Magnifi to start investing on their platform directly.

stockinsights.ai

Stockinsights.ai is an investment research tool designed to automate the process of collecting and interpreting data. On their platform, you can access real-time data from company filings, including call transcripts, investor presentations, and annual reports.

If you do not have the bandwidth to read each company filing, you can leverage their AI assistant to parse through them and retrieve the required data insights. The AI assistant helps you generate and refine investment ideas.

Stockinsights.ai also helps you stay informed about portfolio companies through notifications filtered according to your choice. This enables you to cut unnecessary noise without falling out of the loop.

Daloopa

Daloopa is an investment research tool designed for fundamental analysis. You can load financial performance data for over 3,500 companies in Daloopa’s data sheets. Every data point is hyperlinked to its source, allowing for one-click verification of the data. During earnings season, key data points are updated within minutes, and full updates are completed within 90 minutes.

Since Daloopa focuses mainly on the extraction and delivery of fundamental data, it leverages small AI models instead of LLMs. This enables the company to enhance performance by replacing outdated modules and ensuring uninterrupted data delivery.

Incite AI

Incite AI describes itself as a live intelligence platform. In addition to performing live research, their platform is capable of projecting and forecasting, simulating probable outcomes, and supporting real-time decisions and strategy.

Currently, Incite AI helps users make informed decisions across a diverse range of assets, including global stocks, cryptocurrency assets, ETFs, and mutual funds.

Eqvista – Lightning-fast valuations at your fingertips!

Leveraging AI in investing will not guarantee outperformance or eliminate risk. However, it empowers investors to make smarter decisions and execute personalized strategies more quickly than ever before. As AI gains traction in investing, successful investors will be those who integrate AI thoughtfully while maintaining strategic oversight and adaptability.

Eqvista has developed a real-time valuation software that combines the agility of AI with the reliability of human experts. Contact us to learn more about our valuation software!