Can Chat GPT Analyze Stocks? Top 6 Smart Ways to Analyze Stocks [2023]

Introduction

Can Chat GPT analyze stocks? Let’s discuss this question.

We all think about it while discussing Chat GPT. Chat GPT should no way be used in isolation to make investment decisions.

It can help you more fluently and efficiently dissect a stock if you ask the AI the right questions.

Can Chat GPT analyze stocks? The answer is Yes sure.

It may be used to learn about a company at a high level, carry out a SWOT analysis, summarise earnings calls, gauge a company’s ESG credentials, induce code to backtest buy and sell signals, pinpoint significant hazards, and more.

Can Chat GPT Analyze Stocks

With all the reports about Chat GPT, it got me asking- can you use the sophisticated artificial intelligence (AI) chatbot to dissect a stock?

To test it out, first, you asked “Should we invest in Tesla? ” And it gave you a veritably general, introductory answer. But after a lot of experimentation, we realized that the trick is to ask it the right questions – if you do, you get some fairly emotional responses. So then are six smart ways to use ChaptGPT to dissect a stock.

Can Chat GPT Analyze Stocks

Gain a High-Level Understanding of a Company

Buying into a company’s stock principally means investing in the firm itself. And before you do so, it’s pivotal to understand the company well. Now, you can get that by reading periodic reports, investor presentations, and so on. But you can also use ChatGPT to get an original, high-level understanding. For example, If you asked it to “ explain to me the Tesla’s exact business model ”.

That’s a enough good summary, telling me what Tesla sells and how( which is inversely as important). Taking it a step further, you can use Chat GPT to figure out a company’s profitable moat – that is, the firm’s ability to maintain its edge over the competition, guarding its market share and profit over the long term. fabulous investor Warren Buffett always checks out a company’s moat before he invests. So we asked ChatGPT, “What are Tesla’s profitable moats ”.

Perform a SWOT Analysis

You can also use Chat GPT to do a SWOT analysis – a fact-grounded, data-driven evaluation of an establishment’s strengths, weaknesses, opportunities, and threats. This is a veritably useful exercise, but it can be relatively time-consuming to do in real life. we asked Chat GPT to “ write a SWOT analysis on Tesla ”, and, although relatively simplistic, the response was a great start. You can try it out.

Epitomize Earnings Calls

Earnings calls are a crucial source of precious information for investors. During these hourlong calls every quarter, a company’s top brass goes over the firm’s recent performance, discusses the outlook for the business and industry, answers questions from analysts, and more. But it could take ages to hear the calls for every stock you’re interested in. So why not ask Chat GPT to epitomize them for you? Then’s how we did that.

First, we searched “Tesla Q4 2022 earnings call transcript” on Google to get the transcript of the precise earnings call we were interested in, and that provided me with many links with the full transcript, including the management team’s set remarks and the Q&A session with analysts. we also pasted the link’s URL into ChatGPT and asked it to give me the 15 most important points. ( Note that if you just ask it for crucial points without any specifying  number, it’ll give you only five.)

Estimate a Company’s ESG Credentials

Investing is about further than just returns you can choose opportunities grounded on the effects they’ve on the world around you. Although there are several approaches, environmental, social, and governance (ESG) investment is one of the most well-liked ones. And there’s evidence suggesting that firms with good ESG credentials outperform their peers over the long term. So with that in mind, you can use ChatGPT to see how good( or bad) a firm looks through an ESG lens.

Induce Code to Backtest Buy and Vend Signals

This is a more sophisticated way to use Chat GPT and one that’ll appeal to the coders out there. Say you wanted to see whether it’s a good time to buy a stock grounded on some specialized analysis index – for example, the relative strength indicator (RSI). Now, flashback, the RSI assigns a number between zero and 100 to an asset below 30 means it’s “ oversold ”, potentially offering up a seductive entry point.

Imagine if you wanted to know whether buying a particular stock whenever its RSI fell below 30 had historically, on average, been profitable. A straightforward query, indeed, but one that is challenging to respond to. However, coding is a fashionable method, but it’s a time-consuming procedure that needs some specialized skills. This is where ChatGPT comes in to write the code for you, we did so. Write some code to track Tesla’s stock price one month when its RSI falls below 30 and he write you a perfect stock analysis code.

Can Chat GPT Analyze Stocks- SWOT

Identify Crucial Risks

No investment analysis is complete without duly considering risk. The stylish investors out there are the ones who not only identify promising stocks but also pay close attention to what could go wrong and hit the exits accordingly. However, just ask Chat GPT for some original ideas, If you’re not sure what the crucial risks are for a particular company.

Now, of the lot, let’s say we suppose the first one( market competition and new entrants) could do the most damage. That’s the one we don’t probe further. And we don’t see that Tesla – along with several other automakers – lately slashed its prices as competition in the EV market has hotted up, sparking talks of an “EV price war”. We don’t view that as a crucial risk, and would look to see how price cuts would impact Tesla’s above-average profit margins – especially in light of its fairly high valuation( risk # 8 from ChatGPT’s list).

Looks Good But What are Chat GPT’s Limitations

Dispensable to say, ChatGPT isn’t perfect – neither is any AI technology at the moment. And there are some important limitations to be apprehensive of when using it to dissect a stock. First, it won’t be suitable to answer the questions we went through for every company – it’s going to struggle with lower, lower- known ones. Tesla was carefully chosen for all my instances since it is so well-known.

Alternatively, ChatGPT’s training data only goes up to 2021. That means all its answers are missing at least a year’s worth of recent information, and that can be a big limitation if something major happens to the company or industry lately. There is no way to sugarcoat the fact that the AI occasionally spits forth incorrect responses. Look at the example below, where it told me “ Tesla is anticipated to profit from adding competition in the EV market ”. It doesn’t take an MBA degree to realize that a firm infrequently benefits from rising competition.

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Conclusion

Chat GPT has surfaced as a game-changing tool in stock market analysis. Its ability to reuse vast amounts of information, perform abecedarian and sentiment analysis, help in specialized analysis, and induce forecasts to make it a precious asset for investors. still, it’s pivotal to exercise caution and use Chat GPT’s insights as a supplement to mortal expertise. By combining the power of AI with mortal judgment, investors can potentially unleash new.

FAQs

Can ChatGPT prognosticate stock prices?

A ChatGPT can not prognosticate unborn stock prices directly. It doesn’t have access to current market data or the ability to dissect real-time trends. Stock prices are told by colorful factors similar to market conditions, company performance, and profitable indicators, which bear technical analysis beyond the scope of ChatGPT.

Can Chat GPT give investment advice?

A Chat GPT can not give individualized investment advice. Investment decisions should be grounded on careful consideration of individual fiscal goals, risk tolerance, and consultation with a good fiscal advisor. Chat GPT can offer general information about investing and explain introductory concepts, but it isn’t a substitute for professional fiscal guidance.

Does ChatGPT have access to insider information about stocks?

A ChatGPT doesn’t have access to privileged or insider information. It can give information grounded on intimately available sources up until September 2021. Insider trading is illegal, and counting on-public information for investment decisions is largely discouraged.

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