--- title: "Finance Professor Claims ChatGPT Can Predict Stock Performance" description: "According to finance professor Alejandro Lopez-Lira, large language models like ChatGPT could be used to forecast stock prices." date: "2023-04-13" modified: "2023-04-13" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/the-byte/finance-professor-claims-chatgpt-can-predict-stock-performance" categories: - "Artificial Intelligence" - "Finance" - "Future Society" - "OpenAI" tags: - "ai chatbot" - "chatgpt" - "stock market" - "the digest" --- # Finance Professor Claims ChatGPT Can Predict Stock Performance ![According to finance professor Alejandro Lopez-Lira, large language models like ChatGPT could be used to forecast stock prices.]() *\Image: Getty Images\* ## AI Stock ChatGPT is a real jack of all trades. The AI chatbot can [draft cover letters](), [tinker with code](), and even [breathe life into a Furby](). And now, maybe OpenAI's blockbuster tool could even make you rich — emphasis on the "maybe." According to University of Florida finance professor Alejandro Lopez-Lira, large language models (LLMs) like it could be used to forecast stock prices. As [*CNBC* reports](), it's an intriguing use of the tech that could potentially have some pretty substantial economic implications. Just last month, Goldman Sachs [estimated]() that around 35 percent of financial jobs are already on the chopping block due to AI. But we're still a far cry from a point where ChatGPT can turn you into a millionaire overnight. ## Predictable Returns In a [yet-to-be-peer-reviewed]() paper, Lopez-Lira found that ChatGPT was able to predict the direction of stock prices well enough to make a difference in returns just by parsing financial headlines. "The fact that ChatGPT is understanding information meant for humans almost guarantees if the market doesn’t respond perfectly, that there will be return predictability," Lopez-Lira told *CNBC*. But there are plenty of limitations to the professor's experiment. For one, ChatGPT never actually analyzed target prices or did any calculations. Worse yet, LLMs have a strong tendency to [botch arithmetic](). And furthermore, Lopez-Lira predicted that if everybody in the finance industry would start analyzing headlines using LLMs like ChatGPT, their advantage could diminish completely given enough time, wiping out any potential gains. "As more and more people use these type of tools, the markets are going to become more efficient, so you would expect return predictability to decline," he told *CNBC*. "So my guess is, if I run this exercise, in the next five years, by the year five, there will be zero return predictability." **More on ChatGPT:** *[ChatGPT Is Consuming a Staggering Amount of Water]()* ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()