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Posted February 24, 2021

Ray Blanco

By Ray Blanco

Asking AI for Its Favorite Stocks

Artificial intelligence (AI) is probably the biggest opportunity that investors alive today will see in their lifetimes.

For decades, useful AI has been science fiction. How many generations of American kids grew up watching The Jetsons with Rosey the robot maid cleaning up around the house? Or watched 2001: A Space Odyssey anxiously as HAL turned on the crew of Discovery One?

For most of human existence, AI has been limited to fiction.

But that’s changing at a rapid pace.

Late last year, OpenAI, the Elon Musk-backed artificial intelligence firm, unveiled GPT-3, the latest version of its incredible language model.

The model has 175 billion parameters – more than a hundred times as complex as its predecessor.

Per VentureBeat, GPT-3 can automatically write emails and articles, summarize text, compose poetry, create websites and even code new AI models…

Yes, it occasionally says horrible stuff.

But it’s a sneak peek at what the best of AI could look like.

Another of OpenAI’s incredible AI models can generate original images from nothing but text:

It’s scary just how convincing some of these fake photos are.

AI Illustrations

AI Images

AI Illustrations

Can AI pick stocks? I figured we’d ask GPT-2, the much less advanced predecessor to GPT-3, what stocks we should own…

Here’s what came back:

Me: Which stocks should I invest in?

GPT-2: This is a really important question to answer because when investors think about who they want to be "investing" in they may consider the top stocks of the last couple of years. But, there is a lot of volatility to the market, so it is easier to invest in smaller stocks that have the potential to perform well over time.

With that said, even if you don't think you have all the information to make the decision, you have to take time to figure out if the stock you are interested in is on the list below.

The following companies are also among the top-performing stocks for the past couple of years.

Apple (AAPL)

Google (GOOG)

JPM and Co (JPM)

Bank of America Corp (BAC)

Wal-Mart Stores (WMT)

It’s pretty incredible that GPT-2 came up with that from nothing – it’s not a pre-canned response.

Take this AI’s recommendations with a grain of salt; it’s been built to produce human-like language, not to pick good investments (which is much, much harder).

Still, I think that the current state of AI provides a small taste of what’s to come. AI advances will work their way into our lives slowly – already, much smaller AI models are used in things like your smartphone every day. And it’s fair to say that the business opportunity will be like nothing we’ve seen before.

OpenAI, the Elon Musk-backed research lab behind the AI advances in today’s issue, isn't publicly traded.

But there are lots of investible companies working on AI challenges right now. For a look at which have the most potential, watch this space.

Sincerely,

Jonas Elmerraji, CMT

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