Research shows that UK retail investors are increasingly using generative AI to pick stocks and build portfolios. According to eToro, 18% of British investors now use the technology to pick or alter their investments, up from 13% in 2024. Could ChatGPT help me find the best Footsie or S&P 500 stocks to buy for my portfolio? Here are my thoughts.
The problem with using AI for stock picks
When I’ve experimented with ChatGPT in the past for stock picks, I’ve always been unimpressed. That’s because it has literally just scraped the internet for content without doing any thinking itself.
For example, late last year, it gave me Shell, AstraZeneca, Diageo, Unilever, and Tesco when I asked it to give me five top UK stocks for 2025. These were quite boring selections, in my view.
Note that so far, the average year-to-date return here is about 4% – well below the return from the FTSE 100 (about 15%). These calculations don’t include dividends.
The technology is getting smarter though. And looking ahead I expect it to be able to analyse the markets and spot investment opportunities more than it does at present.
But it will still have its limits and here’s the thing, if everyone’s using the technology, the opportunities are going to disappear almost instantly. Ultimately, everyone will be backing the same stocks, meaning that there will be little in the way of profit potential.
Useful for research
Of course, the technology might be useful for research. These days, an investor can quickly ChatGPT or Gemini for information on a company instead, get an overview of a company’s operations or products or ask at a very simple level about the company’s competitive advantages or risks.
They might even find out about the strength of the company’s balance sheet or its return on capital.
That’s all very well but I don’t think it’s smart to rely on the technology for stock picks. I think a better idea is to do some research and try to spot something the market isn’t fully appreciating.
An under-the-radar stock I like today
One UK-listed stock that I don’t think the market is fully appreciating as far as its long-term potential is concerned is Wise (LSE: WISE). It’s a leading provider of international payments and isn’t quite so likely to show up in a random AI search.
In my view, this company is really scalable. While it has grown significantly over the last five years (revenue has climbed from £303m to £1,645m), it still only moves around 5% of the world’s money across borders so there’s plenty of room for growth.
I fully expect it to get much bigger in the years ahead. That’s because not only does the company offer incredibly fast international payments but it keeps lowering its fees – this should keep customers (like myself) locked in.
Now, I’m not saying that this stock will surge in the near term. It could potentially take years to see big gains here.
And there could be bumps along the way. Especially if economic conditions deteriorate and people have less money to send.
I’m optimistic about the investment potential here, however, and believe the stock is worth a look. With the forward-looking price-to-earnings (P/E) ratio in the mid-20s, I’ve been buying shares in the company myself recently.
