“ChatGPT, What Stocks to Buy? AI Fuels Robo-Advisory Boom”

As ChatGPT nears its third birthday, at least one in 10 retail investors use chatbots to pick stocks. This trend fuels a rapid boom in the robo-advisory market, which includes fintech, banks, and wealth managers. The market is expected to grow from $61.75 billion last year to $470.91 billion by 2029. This marks a nearly 600% increase, showing strong interest in automated financial advice.

Thanks to AI tools like ChatGPT, investors can now select stocks and get analysis once available only to big banks. Jeremy Leung, a former UBS analyst, uses ChatGPT to manage his portfolio since leaving the bank last year. However, he warns the tool may miss crucial details because it cannot access paid market data. Despite this, many investors find AI tools helpful for stock research.

Surveys show half of retail investors are open to using AI tools for investment decisions. Around 13% already use chatbots like ChatGPT or Google’s Gemini. In the UK, 40% have tried AI for personal finance advice. Yet, experts caution that general AI tools should not replace professional financial advisors. They may misquote data or rely too much on past trends, risking poor investment decisions.

AI can select strong stocks when guided properly. In one example, ChatGPT picked 38 stocks with good growth and low debt, including Nvidia and Amazon. This basket outperformed top UK funds by nearly 19 percentage points. Still, users must have some financial knowledge and create clear prompts to get reliable advice. Without careful use, investors risk costly mistakes.

Despite AI’s promise, risks remain high during market downturns. The booming stock markets have masked some dangers, but experts warn investors must learn risk management. Jeremy Leung noted that investors making easy profits with AI might struggle to handle crises. Overall, AI democratizes investing but cannot yet replace traditional advisors or risk management tools.