My Lloyds (LSE:LLOY) shares have doubled in value over the past two/three years — I didn’t buy all my shares at the same time, but the weighted buying price is half the current price.
That’s clearly a very strong return and it makes me very happy. However, as an investor, I’ve got to be thinking about where the share price will go next.
So, I asked ChatGPT for its thoughts. Here’s what it said.
The AI platform noted that it’s impossible to predict where a share price would be in a year’s time.
However, it started by pointing to institutional analysts covering the stock. ChatGPT noted that the average share price target of analysts is around 90.5p.
That infers that the stock could push up around 6% during the period.
It then pointed to recent results which it said showed resilience despite a tough economic backdrop.
But then it actually gave me an opinion of its own. It stated.
Base case: A modest upside from current levels (assuming current price around ~82–83p) to ~90–95p. This assumes steady performance, moderate earnings growth, and no major macro shock.
Upside scenario: If earnings beat expectations and macro conditions improve (UK economy stabilises, interest margin holds) the price could reach ~100–105p.
Downside scenario: If the UK economy falters, credit losses rise or regulatory provisions increase, the price could drop toward ~74–80p.
My “best guess” (most likely outcome) is roughly ~93p in one year, i.e., an increase of ~10–15% from today.
That’s really interesting, and it broadly mirrors my own thoughts. However, it’s important to remember that ChatGPT isn’t a great stock picker.
The caveat
As noted, I believe ChatGPT is right and we’ll likely see the bank shares continue to push up over the coming years.
However, there’s a caveat or two. They’re pretty obvious.
The share price reflects the company’s performance, and if that changes, the trajectory of the share price will too.
Currently, the stock continues to deliver strong results and that’s contributed to the share price’s momentum.
But that can stop in an instant with a bad set of results.
It’s also very important to remember that banks are reflective of the overall health of the economies they serve.
Lloyds only operates in the UK, and this notion that it reflects the health of the UK economy was all too clear to see back in early 2023.
Back then, Lloyds shares were really beaten down and volatile as investors worried about the impact of the cost-of-living crisis on customer credit and unrealised losses on government debt. Despite this, the bank kept churning out stellar results.
It took a long time for momentum to change, and that’s simply because investors weren’t optimistic about the UK economy. Weirdly, I’m not overly optimistic today, but the market seems to be, and Lloyds is performing well.
Maybe the market has learnt to separate the UK’s economic woes from the company’s earnings performance.
Either way, I do believe that Lloyds is a stock worth considering. It has room to run, although there maybe be cheaper and smaller banking stocks out there.
