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- The world is too complex for AI to pick your stocks, a hedge fund quant says</p>
<p>Thibault SpirletJuly 8, 2025 at 8:35 PM</p>
<p>Despite the hype around AI-powered investing, some financial analysts say real-world intuition still matters more.Yuichiro Chino/Getty Images -</p>
<p>A top hedge fund quant says ChatGPT just isn't ready to pick stocks like a real investor.</p>
<p>Gappy Paleologo warned AI still can't match the gut instincts and context humans bring to investing.</p>
<p>Some say Wall Street's big bet on AI might be getting ahead of what the tech can actually do.</p>
<p>The dream of letting ChatGPT build your investment portfolio may still be far off, according to one of the hedge fund world's top quant minds.</p>
<p>Gappy Paleologo, a partner at Balyasny Asset Management and a veteran of firms like Citadel and Hudson River Trading, said large language models like OpenAI's ChatGPT lack the real-world grounding needed to make serious investment decisions.</p>
<p>"The decision to invest in a particular stock is a very demanding cognitive function, and I don't see that really being replicated very well," Paleologo said on Bloomberg's "Money Stuff" podcast.</p>
<p>Despite the hype surrounding AI in finance, Paleologo argued that machine learning models are still disconnected from how investors experience companies through direct observation, human conversation, and a holistic understanding of industries and people.</p>
<p>"Our inputs are much more complex than just a string of text or YouTube videos," he said. "An investor has a fundamentally different experience of a company than an LLM that has an experience that is mediated by multiple layers of processing."</p>
<p>While AI may be able to handle baseline tasks like replicating a researcher's writing style or summarizing earnings calls, Paleologo remains skeptical of its ability to generate conviction around trades.</p>
<p>The human edge, in his view, is still rooted in messy, real-world intuition.</p>
<p>That is not to say AI won't change the game. He said he expects large firms like Bloomberg to roll out advanced prompt-based tools that replace traditional terminals, allowing investors to interact with data more naturally.</p>
<p>"This is going to happen in one form or another," he said. " But I don't think AI is that smart also. So I think that having a baseline system would be already pretty good."</p>
<p>AI dreams meet economic reality</p>
<p>OpenAI CEO Sam Altman said the average ChatGPT query uses about one fifteenth of a teaspoon of water.Justin Sullivan via Getty Images</p>
<p>Paleologo's caution comes as Wall Street is increasingly betting on AI to fuel the next wave of stock market growth.</p>
<p>Tech stocks, especially in the AI space, have soared since ChatGPT's launch in 2022, with the Magnificent Seven — Apple, Amazon, Alphabet, Meta, Microsoft, Tesla, and Nvidia — now making up roughly one-third of the S&P 500's total market value.</p>
<p>But that optimism is meeting resistance. Market strategists like Callie Cox have warned that the AI trade could hit a wall amid rising tariffs, inflationary pressure, and slowing consumer demand.</p>
<p>Others have drawn historical parallels to the dot-com bubble. Richard Bernstein, chief investment officer of the $15 billion investment firm Richard Bernstein Advisors, said the AI mania is "eerily similar" to the overhype of internet stocks in the late 1990s.</p>
<p>As Paleologo sees it, AI may eventually integrate into investors' toolkits, but for now, it still lacks the sensory, intuitive, and contextual capabilities that define truly strategic investing.</p>
<p>on Business Insider</p>
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