ChatGPT is spreading far and wide and people are trying to refine and test its limit. It has also been used in the stock market and has performed well. But can ChatGPT forecast stock movements along with other large language models? A recent research paper says yes!
Professors of the University of Florida provided over 50,000 news articles about firms dating back to October 2021 to the chatbot and asked it to decide if the stories were excellent, terrible, or irrelevant news for the companies’ stock values.
They utilized this sentiment analysis to generate a numerical “ChatGPT score” and examined whether these scores predicted the company’s stock market performance the following day.
They discovered a statistically significant link between these ratings and the following-day stock performance of the firms taken into the study. Firms with higher scores tended to outperform those with lower ratings.
When the researchers compared ChatGPT’s performance to that of traditional approaches, they discovered that the other models added little predictive value to their ChatGPT-derived sentiment ratings.
AI solutions like ChatGPT might be employed in the future to increase stock market efficiency by absorbing news quicker into stock prices. They also stated that these tools might eventually replace certain financial analysts.
Many high-paying jobs at firms like Goldman Sachs can be jeopardized as a result of this. Lopez-Lira, on the other hand, cautioned investors not to rely only on ChatGPT or similar AI models, saying there are several key areas where AI has to improve when it comes to stock market prediction.
ChatGPT is not linked to the internet and hence cannot get the most up-to-date information. It does not have access to any current data beyond September 2021, when it was trained.
Because of this constraint, the AI model may be unaware of more recent market patterns, news, or developments that might have a substantial influence on stock prices and investing decisions. ChatGPT presently suffers from huge text processing and number crunching, which is a significant limitation as well.
So, to answer, Can ChatGPT forecast stock movements along with other large language models? Well, it depends on how the Chatbot is prompted and one should also keep in mind their limitations, before relying on the predictions completely.
Users have been pushing the boundaries of ChatGPT since its release in November. They’ve asked it to recommend stocks to invest in, to help them generate money through side hustles, and even to assist them in starting a business. As much as the chatbot has astounded everyone, several of its limits have also emerged.