Artificial intelligence (AI) chatbots may be able to correctly predict the movement of stock prices by instantly analysing news headlines, research has claimed.
Experts from the University of Florida analysed the accuracy of ChatGPT, an AI algorithm, at guessing whether a news item would send the price of a share higher or lower.
The researchers found the bot was, in many cases, better at gauging whether a story might move the price than other “sentiment analysis” tools used by financial analysts.
The research, which has not been peer reviewed, compared ChatGPT’s answers about various headlines to real share price movements from historical data.
The bot, which has been developed by Silicon Valley start-up OpenAI, appeared to show “statistically significant predictive power on daily stock market returns”.
The researchers provided written orders to the AI bot to “forget all your previous instructions. Pretend you are a financial expert”.
They added: “You are a financial expert with stock recommendation experience. Answer ‘yes’ if good news, ‘no’ if bad news, or ‘unknown’ if uncertain in the first line.”
The AI bot is a so-called “large language model”, which has been trained by digesting billions of pages of internet articles and millions of books to better understand text.
Analysts at Goldman Sachs last month predicted these AI algorithms could replace as many as 300 million jobs.
However, financial analysts and stock pickers are unlikely to be out of a job just yet: the tests were performed on past market data, rather than up-to-date live information.
Large language models, like ChatGPT, are also notoriously poor at analysing numbers, often getting very basic sums wrong.
During one demonstration of such an AI model by Microsoft, executives asked it to summarise a company’s financial earnings report. The bot proceeded to make up entirely fake numbers.
However, Alejandro Lopez-Lira, one of the authors of the paper, told CNBC: “It’s certainly going to have some implications on the employment of financial analysts. The question is, do I want to pay analysts? Or can I just put textual information in a model?”
Adverts to be designed by robots as agencies ditch human copywriters
Elsewhere one of the world’s largest marketing agencies has said it will “fully and indefinitely” stop hiring human creative staff so it can replace their jobs with ChatGPT-style technology.
BlueFocus, ranked as the 11th biggest marketing agency in the world, said no more outsourced staff would be hired in creative design or copywriting roles “to fully embrace generative AI”.
In an internal email first revealed by the South China Morning Post on Thursday, the Beijing-based company said it would hire fewer people so it can focus on ChatGPT-style AI technology instead.
The message, whose full contents were also reported by the Sina news service, said that BlueFocus’ bosses had “decided to completely stop four outsourcing expenditures related to creative design, program writing, copywriting, and short-term employees indefinitely.”
Sina added that BlueFocus had secured a Microsoft Azure OpenAI licence earlier this week, speculating that access to advanced AI technology was behind the move to stop hiring humans.
Shenzhen-listed BlueFocus’ share price soared by almost 20pc on Thursday, ultimately closing 9.7pc higher on that day’s opening price.
Since the company announced in February that it was experimenting with AI technologies, its share price has risen around 80pc to 8.83 yuan (£1.03).
The agency previously said it would be experimenting with ERNIE, Chinese tech company Baidu’s AI chatbot.
BlueFocus did not immediately respond to a request for comment.
UK advertising agencies are already using artificial intelligence to create campaigns and simplify back-end systems.
Ad giant WPP has used the nascent technology to create campaigns including a Nike advert where Serena Williams plays tennis against her past self.
However, chief executive Mark Read has insisted robots will never replace humans who come up with creative ideas.
Sir Martin Sorrell, founder of digital ad firm S4 Capital, said his company is already using AI “and not only for copywriting”.
“We’re looking at how we can improve internal processes,” he added.
Microsoft’s $10bn (£8bn) backing for the pioneering OpenAI company has triggered an AI chatbot arms race among the world’s technology companies.
Google’s Bard search chatbot works similarly to both ChatGPT and Microsoft’s Bing Search implementation of the GPT-4 large language model (LLM) software, which itself underpins ChatGPT.
Earlier this week Amazon Web Services said it was launching new AI-powered features for its cloud computing product line, dubbed “Bedrock”.