GenAI increasingly seen by investors as a key tool to research companies and evaluate stocks

Generative artificial intelligence (GenAI) is rapidly becoming a crucial tool for retail investors researching companies and evaluating stocks, according to a study published in the Journal of Accounting and Economics. Assistant Professor Joe Croom of Indiana University's Kelley School of Business and his co-authors analyzed over 410,000 investor queries to a major brokerage's GenAI chatbot, and surveyed nearly 2,200 investors.

The findings reveal that nearly half of the surveyed investors have used GenAI for financial information or investment decisions, with almost a fifth using it routinely. Investors primarily employ GenAI to simplify complex financial data and better understand market movements. While some use GenAI to ask basic questions like "What stock should I buy?", many ask more nuanced questions such as "How healthy are this company's profit margins?"

The study indicates that GenAI's central role is in making large volumes of financial information easier and faster to comprehend. However, accuracy, privacy, and response quality remain concerns for users. Experienced investors, who are more familiar with finance, appear to derive greater benefits from GenAI, while non-users express skepticism about its future adoption in investing tasks.

The research highlights the potential implications for regulators and companies managing GenAI-using investors.