'Chatbot, what stocks should I buy?' AI fuels boom in robo-advisory market

At least one in 10 retail investors is using a chatbot to pick stocks, fueling a boom in the robo-advisory market, but even fans say it is a high-risk strategy that cannot replace traditional advisors just yet.

Thanks to artificial intelligence (AI), anyone can select stocks, monitor them and obtain investment analysis that was once only available to big banks or institutional investors.

The robo-advisory market – which includes all companies providing automated, algorithm-driven financial advice such as fintech, banks and wealth managers – is forecast to grow to $470.91 billion in revenues in 2029 from $61.75 billion last year, marking a roughly 600 percent increase, according to data analysis firm Research and Markets.

Jeremy Leung, who spent almost two decades analyzing companies for UBS, has been using a chatbot to chase stocks for his multi-asset portfolio since he lost his job at a Swiss bank earlier this year.

"I no longer have the luxury of a Bloomberg (terminal), or those kinds of market-data services which are very, very expensive," Leung said.

Leung isn't alone. The industry is growing fast and exponentially.

About half of retail investors say they would use AI tools to pick or alter investments in their portfolio, and 13 percent of them already use these tools, according to a survey from broker eToro, which polled 11,000 retail investors across the world.

"AI models can be brilliant," said Dan Moczulski, UK managing director at eToro, which boasts 30 million users worldwide. "The risk comes when people treat generic models ... as crystal balls."

Moczulski said it is best to use AI-generated platforms specifically trained to analyze markets as "general AI models can misquote figures and dates, lean too hard on a pre-established narrative, and overly rely on past price action to attempt to predict the future."