How institutional investors are using AI in investment research
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Most institutional investors say AI is a key part of their investment research process, according to a new report from Brunswick Group.
Why it matters: It's not just young retail investors that are relying on AI to inform investing strategies.
By the numbers: 54% say AI outputs are an important part of their research, per the report.
- Roughly 7 in 10 say AI has changed the way they approach earnings calls, with 46% saying they are more likely to skip the calls altogether and review AI-generated summaries instead.
- Of note, 4 in 10 say they trust AI summaries of financial content as much as ones written by the sell-side.
Zoom out: The influence of nontraditional media interviews are also growing in importance.
- 39% of institutional investors say they value podcasts or in-depth interviews with management or competitors, while 28% refer to newsletters from influential industry participants. This is neck-and-neck with mainstream financial media (29%).
In response, we've seen executives take their messages to non-traditional or emerging platforms.
- For example, Coinbase CEO Brian Armstrong hosted a Reddit "ask me anything" (AMA) session and Lyft CEO David Risher recently joined web show "TBPN" to frame the company's Q3 results.
What's next: Given the rise of large language models as an information gathering source, corporate communications teams are likely to begin crafting their IR messaging in a way that is easy for chatbots to regurgitate.
What to watch: AI may be too good for financial analysts in particular.
- According to a recent Stanford study, AI is expected to decrease wages for financial analysts — one of only two sectors predicted to face pay declines of the 22 studied.
💭 Thought bubble from Axios' Madison Mills: Information is edge on Wall Street, and the best analysts will survive by continuing to get information that isn't available to AI that informs their stock ratings.
- Without that informational edge, the work may be increasingly outsourced to large language models.
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