The FTSE 100 offers very little in the way of tech exposure. And when I asked ChatGPT for the best FTSE 100 stocks for a rotation out of tech, it correctly highlighted that.
It noted that the index is heavily weighted towards financials, mining and oil. This is true, but hardly rocket science.
I was unimpressed by its stock suggestions and the reasoning for them. These included HSBC, BP, Unilever, Rio Tinto and Diageo.
Yes, these certainly aren’t tech stocks, but I fear ChatGPT has just sent me the most prevalent names in non-tech sectors.
Stock-specific benefits were also lacking. It said it chose HSBC because it offers banking exposure beyond the UK. This is true, but the most important factor in any investment decision should always be the stock’s valuation.
This is a common theme throughout its recommendations. It even said that Diageo was ‘recently’ noted as the “best FTSE 100 stocks to watch in 2025”. Well I have news for you ChatGPT, it’s almost 2026 and that article was desperately incorrect.
How can ChatGPT be useful?
I think the above goes some way to show that ChatGPT has its limitations. My peers and I often use it for research and even for developing models and creating code — if needed.
That latter point I find really useful. Quantitative models are quite simple to create. You give a weighting to certain metrics, such as the price-to-earnings-to-growth (PEG) ratio and operating margin, and then create a formula that ranks the stocks accordingly.
ChatGPT can be useful here. All you have to do is provide it with the data. But beyond that — not really.
So, where to invest?
One FTSE 100 company that I personally believe is worth considering because of the data is generics producer Hikma Pharmaceuticals (LSE:HIK).
The Amman-founded company currently trades at just 10.2 times forward earnings. This is expected to fall to 9.3 times in 2026 with earnings improving 19.3% this year and 11.2% next year. These are figures based on projections, which can be incorrect.
These figures also give us a PEG ratio of 0.9. This typically suggests a stock is good value. The dividend yield also contributes to the valuation’s appeal, with a forward yield around 3.6%.
However, we need to account for £1.3bn in debt, which is substantial considering the market cap just below £4bn. Not only does this impact the maths, but debt can weigh on earnings growth.
Nonetheless, I believe the valuation picture is attractive. Even when accounting for the fact that generics companies typically trade at a discount to their pharmaceutical and biotech peers, I still think the valuation picture is strong and worth considering.
Moving to qualitative factors, Hikma could receive a boost in the coming years as patents on popular weight-loss drugs expire. This would allow it to enter the market with its own lower-cost alternative without the vast associated R&D.
