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The Impacts of ChatGPT on the Stock Market

Views 16KMay 9, 2024

What is ChatGPT?

ChatGPT, also known as Chat Generative Pre-trained Transformer, is an Artificial Intelligence (AI) chatbot that can understand, and respond very humanly in a conversation. It is developed by a start-up company focused on artificial intelligence called OpenAI, which is based in San Francisco. It was launched in late November 2022 and has since been the talk of the town. It took the internet by storm for its detailed responses and its ability to articulate answers across many domains of knowledge. Within the first five days of its launch, ChatGPT has garnered its first million users.

Like many other chatbots available, ChatGPT was trained with a huge amount of data from the internet which includes e-books, Wikipedia, articles, etc. ChatGPT is continuously learning, which means that as it processes more responses from the users, it becomes better and better at predicting the coming words. As a result, the output generated gets increasingly realistic and natural.

To use ChatGPT, the user must first sign up for an OpenAI API key. This grants the users access to the model and uses it for their operations.

How can ChatGPT be used to provide stock analysis?

ChatGPT's cutting-edge language model performs a great job of finding answers to tough questions and can address them in a way that makes sense. This has quickly aroused the interest of many savvy investors, who are now testing this AI chatbot to see if it can provide any financial advice. Many believe that the responses will carry a certain level of truth as the chatbot is designed and trained with a massive amount of data.

To the disappointment of many savvy investors, ChatGPT programming disallows the provision of any financial advice. However, while the chatbot is unable to provide any financial advice, these users quickly realize that they can instead, derive a quick and decent analysis of a particular stock or funds from either fund houses or analysts. The most amazing part is that all these can be done in seconds!

While all analysis carries a certain degree of bias, an investor can also utilize ChatGPT to perform his or her stock analysis. When it comes to investing in a particular stock, there are often a few essentials to look out for. Here is a list of essentials of investing:

The fundamentals of the stock – An investor should know what this company does, and what services it offers as these are crucial information to know how this company functions and make money.

Price-to-earnings (P/E) ratio – Ratio for valuing a company that measures its current share price relative to its earnings per share (EPS)

Beta – It is a measure of the risk, and it is usually compared to the market

With this readily accessible information, the user can also utilize ChatGPT to come up with a short overall report based on the findings. Here are some tips when it comes to posing your questions to ChatGPT:

Ask ChatGPT to explain the company model

Ask ChatGPT to perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for the company

Ask for a summarized company's earnings report. This includes key takeaways

Ask ChatGPT to identify the key risks to investing in this stock

However, it should also be noted that ChatGPT has only been launched recently and it is trained based on pre-2022 data. The content can sometimes be misleading, outdated, and inaccurate, and users should always take the responses with a pinch of salt. There is still a lot of learning for this AI chatbot.

How may this impact retail investing?

While ChatGPT is primarily designed as a language model, it does have the potential to impact investors in different ways. Many investors have been accustomed to searching for news and information about a certain stock that they are interested in through search engines. However, some information requires users to look through pages of a report before arriving at what they are searching for.

With ChatGPT, this process is simplified where users can simply pose a direct question and derive their answer right away. This helps an investor to potentially save time and resources in analyzing this complex financial information.

An investor must be constantly updated with the company's news. ChatGPT can help to summarize this news and provides a sentiment analysis. With a better understanding of what happened to the company in the past, an investor is now better able to make an informed decision about his or her investment.

All in all, ChatGPT can help an investor to make a more informed decision within a shorter period by increasing his or her efficiency in their analysis of this financial information.

How could the stock market be affected?

The emergence of Exchanged-Traded Funds (ETFs) has shaken the world of traditional portfolio investment. As a matter of fact, most ETFs available in the market these days are index funds, which are a portfolio of stocks and bonds designed to track the performance of a financial market index.

With the attention that ChatGPT has garnered since its launch, Artificial Intelligence has become a significant topic in the world of investing. It will not be surprising to see more AI-powered funds in the years to come.

Moomoo stock trading app provides free 24/7 global news to help investors to get the latest market trends and find potential investing opportunities. Sign up and download the moomoo app today to get free access to the real-time global news about ChatGPT or AI-related information!

The Impacts of ChatGPT on the Stock Market -1

Images provided are not current and any securities are shown for illustrative purposes only.

Frequency Asked Questions
What is the risk of using Chatgpt for investing advice?
What are the essentials of investing?
How to use Chatgpt in stock investing?

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy.

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