From Morningstar: 2024-09-26 10:37:00

Machine learning involves using data to enhance performance without human input, a part of artificial intelligence. Algorithms based on training data make predictions in various applications, including finance. AI in stock predictions surpasses human analysts, generating 50-72 basis points alpha monthly, providing more accurate and less biased forecasts. Integration of AI and human analysts can enhance stock prediction accuracy by leveraging each strengths, making predictions more robust and reliable. While AI-powered funds demonstrate marginally superior stock-selection skills and lower transaction costs, there isn’t evidence that they outperform on a risk-adjusted basis. Combining AI and human analysts can lead to improved forecasting and more efficient markets.



Read more at Morningstar: Can AI Predict Future Stock Returns?