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Will AI replace stock market analysts?

An AI model can process huge amounts of data in a fraction of the time and cost it would take a human analyst

Humans can't hope to match the calculating power of AI. Photograph: Spencer Platt/Getty Images

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Proinsias O'Mahony
Tue May 21 2024 - 05:00

Will AI spell doom for equity analysts? Not according to JP Morgan’s Jay Horine, who told the New York Times last month it will “allow the job to be more interesting” by cutting various task times from 10 hours to 10 seconds.

That’s echoed by BNY Mellon, which said in February that analysts could wake up two hours later (6am instead of 4am – lucky them) due to AI efficiencies.

However, a new study, Can AI Replace Stock Analysts?, suggests analysts should be fearful.

[ ‘It is going to have a huge impact’: What does the march of AI mean for our jobs? ]

Yes, it’s true equity research isn’t just about crunching numbers, with analysts bringing “intuition, experience, and an understanding of market dynamics that cannot be replicated by a machine”. Nevertheless, an AI model running on a cheap computer can process huge amounts of data “in a fraction of the time and cost” (15 hours in time, and $2.50 in electricity) it would take a human analyst.

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[ Global markets see record first quarter on back of AI enthusiasm ]

Thus, analysts won’t be cheered by results showing the AI model outperformed analysts “by a large margin” when it came to predicting stock price forecasts in a year’s time. Human intuition and experience cannot match AI’s “sheer processing power and data analysis capabilities”, indicating AI “has the potential to replace human analysts in certain aspects of predicting financial performance”.

AI: Artificial intelligenceJP Morgan ChaseBNY Mellon