Investment Times

How is the Stock market and Investments affected by AI?

The Stock Market and the use of AI as you might know are connected but have you really found out everything. This article will include a focus on the effects of AI on the Stock market.

Capability of AI and present effects on market:

Hedge funds and investment banks already use automated trading systems. According to LSE (London School of Economics) estimates suggest that 60 to 70 % of are trades are conducted algorithmically. This means that people have hired Automated Trading Systems and trading bots. These machines have the capability of accurately predicting market patterns.

Furthermore, AI could also enhance decision making and has a good risk assessment predicting possible risks in the Stock market as well as detecting fraud. AI also has the capability to mimic human intelligence and reasoning in doing so improving through experience.

Are AI bots actually reliable compared to humans who specialise in AI?

You might think that AI is more efficient than humans hence more reliable. That is correct but also incorrect. According to Yale, AI models have frequent hallucinations and biases built in the data used to train them.

 Furthermore, it is easy to manipulate data given by AI. NewsGuard also conducted tests on 10 major chatbots that couldn’t Identify Russian misinformation 24% of the time. NewsGuard has also identified more than 1200 unreliable AI generated new sites.

 A CEO of an AI startup also quoted to the New York Times “Despite our best efforts, they will always hallucinate. That will not go away.” This information shows us that AI will continue to be less reliable than a human no matter what. 

In summary AI is more efficient and accurate in certain areas of the stock market. If you want to invest in stocks, AI might give good suggestions at times, but it is safer to check with an expert before investing as they have more exposure than AI has right now.