Experts predict generative artificial intelligence (AI) will automate many routine tasks in the coming decades, adding trillions to global productivity. Most of the innovators leading the charge are in the S&P 500, which jumped 23.3% higher last year.
Can AI automate stock-picking ideas for me? Well, over the weekend, I asked ChatGPT for its ‘best 3 S&P 500 stocks for me to buy for the next five years’. Here’s the trio it came up with.
Behold the bot’s answers
The app’s top pick was Nvidia (NASDAQ: NVDA), which it said is “driving the AI revolution” in data centres with its leading graphics processing units (GPUs). It’s positioned as the “picks and shovels provider in a gold rush“.
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Next, ChatGPT went for Microsoft. It said the software giant has “transformed into a cloud and AI leader”. Its Azure platform’s fuelling global digital transformation, while the firm enjoys attractive recurring subscription revenue.
Lastly, the AI assistant named Visa (NYSE: V). The payments giant thrives as a “toll collector” that’s benefiting from the shift towards a cashless world.
My thoughts
My initial reaction to these picks is that they’re very strong. All three firms are market leaders, with formidable competitive advantages, exceptional profit margins, and top-tier management.
On the other hand, I also think they’re very obvious. With $3trn+ market-caps, Nvidia and Microsoft are the second- and third-largest companies in the S&P 500. Meanwhile, Visa’s a $617bn juggernaut.
I’ve owned Nvidia shares in the past, while Visa remains one of my top holdings. Alas, I’ve never bought Microsoft stock, but I could get good exposure to it simply buying an S&P 500 index tracker fund.
As expected, ChatGPT summaries their business models and strengths well. However, the information it rattles off is quite generic and can be found anywhere online (unsurprising given that’s where it sourced it from).
Stock-specific risks
The bot offers no fundamental analysis, failing to mention for example that Nvidia’s gross margin has dipped from 78.4% in Q1 2025 to a forecast 73.5% in Q4 2025.
Additionally, there was no mention that Nvidia stock’s trading at an eye-watering 32 times trailing sales. If the firm’s future growth trajectory ends up lower than anticipated, the valuation may not be sustainable.
Microsoft stock’s in a similar position, trading at a pricey 32 times forward earnings. Much AI-fuelled growth’s already priced in, including that of ChatGPT parent OpenAI (which Microsoft has a large stake in).
For Visa, ChatGPT overlooks Vice-President-elect JD Vance’s Credit Card Competition Act. This bill aims to reduce card swipe fees (typically 2%-4%) that are shared by payment processors like Visa and the card-issuing bank. If passed, this bill could impact Visa’s profit margins.
This doesn’t mean I’ll be selling my shares however. Visa’s lobbying heavily against such legislation, arguing that it could lead to unintended consequences for businesses and consumers. But this context would be handy for people to know before deciding whether to invest, I’d argue.
I’ll keep tabs on these
I certainly wouldn’t bet against this trio outperforming over the next five years. What I’ll do is track their performance to see if they really do turn out to be the very best S&P 500 shares to buy right now.
