Technology Updates: Experts urge caution about using ChatGPT to pick stocks

Source:

https://arstechnica.com/information-technology/2025/09/experts-urge-caution-about-using-chatgpt-to-pick-stocks/

ChatGPT:

The rapid rise of AI chatbots like ChatGPT has extended into investing, with around 13% of retail investors already using AI tools for stock selection, according to an eToro survey of 11,000 people. Nearly half say they would consider using such tools. Unlike algorithmic trading, ChatGPT functions more as an advisory tool: investors ask questions, review analysis, and then trade manually.

Some early results appear impressive. For example, Finder asked ChatGPT in 2023 to pick high-quality stocks, creating a 38-stock portfolio that grew nearly 55%, outperforming top UK funds. Former UBS analyst Jeremy Leung also now uses ChatGPT to support his portfolio, citing its affordability compared with professional data services.

However, experts stress caution. Current strong market conditions—US stocks near record highs and the S&P 500 up 13% this year after 23% last year—make many strategies appear successful. Analysts warn that general AI models lack access to real-time data, can misquote figures, and often rely too heavily on past performance. “The risk comes when people treat generic models like crystal balls,” noted eToro’s UK managing director Dan Moczulski.

AI use continues a long history of tech transforming investing, from Charles Schwab’s electronic trading in 1984 to robo-advisors like Betterment and Wealthfront after 2010. The robo-advisory market itself is forecast to grow 600% by 2029. ChatGPT marks a new phase, enabling direct investor interaction with AI, but with limits—such as no access to paywalled data.

Experts caution that while AI democratizes access to financial insights, reliance on it may leave retail investors unprepared for downturns. As Leung warned, gains in rising markets may vanish if users lack risk management strategies.