By Noel S. Williams

As AI development inexorably surges ahead, it will likely take over some jobs. In some segments of the financial and banking industry, that cannot happen fast enough.

Transformative AI may lead to greater productivity, especially in white-collar jobs. Perhaps humans will have even more leisure time, and that may be a good thing if it makes some Wall Street stock researchers obsolete.

Current AI incarnations have succumbed to artificial hallucinations, but I sometimes wonder if the stock analysts are wallowing in human hallucinations. Otherwise they are just tricky and manipulative as they try to front-run the market.

By contrast, assiduously trained AI financial algorithms will be able to aggregate and summarize vast troves of business and market data, including various financial ratios, performance metrics, and a plethora of objective stats — versus those that “lie.” They will be able to analyze technical charts and graphs, then compare and contrast companies’ fundamental operations and prospects.

In the future, a thoroughly vetted AI version, with access to SEC documents and recent corporate disclosures, may advise hapless investors to stay away from companies like First Republic Bank, for example. It certainly can’t do much worse than Credit Suisse. On April 26, 2023, an analyst from that troubled bank cut their price target on First Republic Bank from $130 to $11 per share. Even by equity analyst standards, that’s a huge drop in sentiment to foist on investors after the fact.

Where were they during the regional banking crisis — facilitating their own rescue? First Republic was trading at $123 per share in early March 2023, then dropped precipitously to lower double digits in late March. For over a month, First Republic has been languishing. Now it seems to be in a going-concern death spiral, having just reported such dismal earnings that it has descended into abysmal troughs. There’s even potential of a government seizure.

In fact, the stock is down well over 90 — ninety — percent from its yearly highs. And now — finally — Credit Suisse decides to share its ridiculous “research,” suggesting a price target of $11 versus $130. Well, that’s not actionable analysis considering there’s potential of a government seizure.

That’s one egregious case of equity research incompetence-cum-malfeasance, but there are many. The bots may be an alternative. Indeed, it may provide some solace to average investors who’ve been led astray by irresponsible financial professionals that the finance and banking industry is most susceptible to AI takeover. I’m sure a well-trained and obedient (not the mischievous kind that may be tempted to wantonly change decimal places to cause havoc) instantiation of AI would be more thorough.

Presuming the bots don’t act up, there will be ramifications for day traders who thrive on market volatility induced by misleading or incomplete data. Manipulative short sellers (who bet a stock is going down) who concoct scenarios to substantiate their stock dealings will also be challenged to outwit AI.

If AI is able to collate complete and up-to-date financial data, it may even make the markets more efficient at pricing. These developments, particularly if the markets become less volatile, may have positive implications for Senator Bill Cassidy’s proposal to let Social Security invest some of its funds in the market.