ChatGPT's Stock-Picking Army Should Make Us Nervous

When Jeremy Leung walked away from his Bloomberg terminal and two decades of UBS equity analysis, he didn't walk away from stock picking. He just traded institutional-grade tools for something anyone can access: ChatGPT. Now he's part of a fascinating experiment unfolding across global markets—one where 13% of retail investors are trusting chatbots with their financial futures.

The Numbers: A Market Moving at Digital Speed

The data reads like a Silicon Valley fever dream. The robo-advisory market is forecast to grow to $470.91 billion in revenues in 2029 from $61.75 billion last year, marking a roughly 600% increase, according to Research and Markets. Meanwhile, about half of retail investors say they would use AI tools such as ChatGPT or Google's Gemini to pick or alter investments in their portfolio, and 13% of them already use these tools, per eToro's survey of 11,000 global investors.

In the UK alone, 40% of respondents to a survey by comparative company Finder said they have used chatbots and AI for personal finance advice. That's not a fringe phenomenon—it's mainstream adoption happening in real-time.

The Performance Paradox: When AI Gets Lucky

Here's where the story gets interesting. Finder asked ChatGPT in March 2023 to select a basket of stocks from high-quality businesses, with criteria such as levels of debt, sustained growth and assets that generate an advantage over competitors. The selection of 38 stocks, which includes AI posterchild Nvidia and online retailer Amazon alongside consumer staples like Procter & Gamble and Walmart, has surged nearly 55% so far, almost 19 percentage points more than the average of the UK's 10 most popular funds.

But let's pause here. We're witnessing the equivalent of giving a coin-flipping contest winner a portfolio management license. ChatGPT's stock basket outperformed traditional funds during one of the strongest bull markets in recent history, when U.S. stocks hit record highs and the S&P 500 index has added 13% this year after surging 23% last year. Even a dartboard might have generated alpha in this environment.

The Institutional Reality Check

The global robo advisory market size was estimated at USD 6.61 billion in 2023 and is projected to reach USD 41.83 billion by 2030, growing at a compound annual growth rate (CAGR) of 30.5%, according to Grand View Research. But there's a crucial distinction between established robo-advisors like Betterment and Wealthfront—which use sophisticated algorithms, regulatory oversight, and risk management protocols—and retail investors asking ChatGPT "what stocks should I buy?"

The hybrid model dominates for good reason. The hybrid robo advisory segment was accounted in holding 57.4% of the robo advisory market share in 2024 with its ability to balance automation with human oversight. Professional platforms achieve 2.3 times higher client retention than pure robo models, according to the Chartered Financial Analyst Institute.

The Democratization Double-Edge

This surge represents the ultimate democratization of investment analysis. Thanks to artificial intelligence, anyone can select stocks, monitor them and obtain investment analysis that was once only available to big banks or institutional investors. Former UBS analyst Leung captures the appeal perfectly: "I no longer have the luxury of a Bloomberg (terminal), or those kinds of market-data services which are very, very expensive. Even the simple ChatGPT tool can do a lot and replicate a lot of the workflows that I used to do".

Yet even Leung, with his institutional background, acknowledges the limitations. ChatGPT might miss some crucial analyses as it can't access data behind a paywall. If a seasoned analyst recognizes these blind spots, what about the average investor who lacks that professional context?

The Risk Management Reality

Here's the uncomfortable truth: we're conducting a massive, uncontrolled experiment with retail investor capital. The exuberance for the AI tool, which has democratised access to investment, means it is also impossible to tell if retail investors are using risk management tools to properly mitigate potential losses when the markets turn.

eToro's Dan Moczulski puts it succinctly: "The risk comes when people treat generic models like ChatGPT or Gemini as crystal balls". Generic AI models can misquote figures and dates, lean too hard on a pre-established narrative, and overly rely on past price action to attempt to predict the future.

The Behavioral Finance Blind Spot

The timing of this ChatGPT investing boom couldn't be more precarious. Over 28% of Americans prefer robo advisor investing strategy in 2024. The highest percentage (41%) is recorded among millennials, followed by gen Z with 40%. These digital natives are embracing AI-driven investment advice just as markets hover near all-time highs.

"If people get comfortable investing using AI and they're making money, they may not be able to manage in a crisis or downturn", warns Leung. This psychological conditioning—where early success with AI tools creates overconfidence—could prove catastrophic when market conditions inevitably shift.

What This Means for Marketing Leaders

The robo-advisory surge offers a fascinating case study in how AI democratization unfolds. We're witnessing the classic pattern: breakthrough technology making expert-level capabilities accessible to mass markets, creating both tremendous opportunity and systemic risk.

For marketing professionals watching this space, the implications extend beyond financial services. Any industry where AI can replicate expert analysis faces similar disruption dynamics. The question isn't whether democratization happens—it's whether proper guardrails develop alongside accessibility.

The ChatGPT investing phenomenon represents either the future of financial democracy or a cautionary tale about giving powerful tools to unprepared users. Right now, bull market conditions mask the difference. When the inevitable correction arrives, we'll discover which interpretation proves correct.

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