In an era where innovation is not just encouraged but necessary, our company has been at the forefront, seamlessly integrating advanced Artificial Intelligence (AI) technologies into our financial information services long before the industry titans caught up.
The recent announcement from JP Morgan about their deployment of Chat GPT, now branded as IndexGPT, for their investment advisors may have grabbed headlines, but for us, it's yesterday's news.
We have been harnessing the power of AI, such as Chat GPT, to enhance our customer experiences, offering personalized, data-driven, and on-demand investment information.
Let's look at a recent ChatGPT experiment to ensure we have covered all the bases on top of our usual analysis. We asked it. "Using the plugins, what do you see as the prospects for Nvidia stock."
"Based on the recent SEC filings and earnings call transcripts for Nvidia (NVDA), here are some key points that might influence the future prospects of the stock:
Financial Performance: Nvidia's recent financial reports indicate a strong performance. The company's revenue and net income have been growing consistently. This positive sign could increase the stock's value if the trend continues.
Market Position: nVidia is a leading player in the GPU market, which is expected to grow significantly in the coming years. The company's strong market position and its innovative product portfolio could drive its future growth.
Investments in AI and Data Centers: nVidia is heavily investing in AI and data centers which are rapidly growing sectors. These investments could lead to significant revenue growth in the future.
Earnings Call Insights: During the recent earnings call, the management expressed optimism about the company's future prospects. They highlighted the strong demand for their products and the potential growth opportunities in the AI and data center markets.
In the latest earnings call transcript for Nvidia, the following points were mentioned that could be seen as warnings or potential challenges for the company's future:
Supply Constraints: The company mentioned that it continues to face supply constraints and is working to manage the situation. This could impact the company's ability to meet demand and affect its revenue.
Regulatory Approvals: Nvidia's planned acquisition of Arm is still pending regulatory approvals. The outcome of this situation could have significant implications for Nvidia's future growth strategy.
Competitive Landscape: The company acknowledged the competitive landscape in the AI and gaming markets. While Nvidia is currently a leader in these areas, the dynamics of the industry could change.
Dependence on Certain Markets: Nvidia's strong performance is currently driven by gaming and data center market growth. Any slowdown in these markets could impact the company's financial performance.
Please note that these are potential challenges and not necessarily indicators of negative performance in the future. The company's management may already have strategies in place to address these issues.
Then we asked, "What does Wolfram Alpha say about nVidia, and what do major analysts, banks, and social media say about its prospects? Summarise because I am deciding whether to keep or sell."
"Here's a summary of the information I found:
Social Media Sentiment:
There's a generally positive sentiment towards NVIDIA on social media platforms like Twitter and Reddit. Many users are optimistic about the company's future prospects, especially given its strong position in the growing fields of AI and gaming.
Here's a specific comment from StockTwits, a social media platform for investors and traders:
"Like I said here after their earnings call, 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐡𝐨𝐰 𝐭𝐡𝐞 𝐠𝐚𝐦𝐞 𝐢𝐬 𝐏𝐋𝐀𝐘𝐄𝐃! $NVDA posts just "okay" results but then "projects" a strong outlook, and Bam, the stock rips to the point where it now needs to grow at 35% + minimum 𝐘𝐎𝐘 for years to generate a positive return.
𝐍𝐎𝐖, (26th May, Friday afternoon) at EOD, $NVDA files an updated shelf registration 𝐭𝐨 𝐬𝐞𝐥𝐥 $10BN of stock. 🤣😂"
This user expresses a somewhat skeptical view of NVIDIA's stock performance, suggesting that the company's strong outlook projections drive the stock price up but that the company will need to maintain a high growth rate to generate a positive return. The user also mentions that NVIDIA has filed an updated shelf registration to sell $10 billion of stock, which could potentially dilute the stock's value.
As for determining the impact of social media sentiment on the stock, it's a complex task. While positive sentiment can drive up demand for the stock, it's not a guarantee of future performance. It's also important to consider that social media sentiment can be influenced by a variety of factors, including market trends, news events, and even manipulation. Therefore, while it can be useful for getting a sense of the general mood towards a stock, it should be used in conjunction with other forms of analysis and not as the sole basis for investment decisions."
But the point of AI is also efficiency and one place for all answers. Of course, we normally go into a lot more social media chatter – I'm not saying to the extent of the CIA looking at chatter on terrorist attacks (!). However, there are sites that can do this.
Deeper probing of earnings call transcripts and SEC filings is where it adds more colour to anything we miss. Of course, journalists and existing sources do this too.
So what does the JP Morgan announcement mean?
First, they know they need to up the game of their advisors. ChatGPT should make those advisors better at their jobs and retain clients and their own jobs. Yes, Chat becomes a job saver.
Second, Jamie aint dumb. The CEO of JP knows AI is the way to make your stock price rocket, and the asset management business is indeed a marketing business.
How do we use it in our Great Investments Programme (part of www.campaignforamillion.com)? We ask it to analyse negative sentiment from earnings call transcripts. Social media sentiment is less of a concern for us.
Bottom line: along with all our analysis of 10,000 companies across valuation, growth, income, cash flow, and momentum, this is an additional filter.
Alpesh Patel OBE
Former Visiting Fellow in Business, Corpus Christi College Oxford University.