GPT-4 is better than humans at financial forecasting, new study shows

• OpenAI's GPT-4 is amended than humans astatine analyzing financial statements and making forecasts, according to a caller study.
• "Even without immoderate communicative aliases industry-specific information, nan LLM outperforms financial analysts successful its expertise to foretell net changes," nan study found.
• Trading strategies based connected GPT-4 besides delivered much profitable results than nan banal market.

OpenAI's GPT-4 proved to beryllium a amended financial expert than humans, according to a caller study.

The findings could upend nan financial services manufacture that, for illustration different business sectors, is racing to adopt generative AI technologies.

According to nan study conducted by nan Booth School of Business astatine nan University of Chicago, nan ample connection exemplary did a amended occupation of analyzing financial statements and making predictions based connected those statements.

"Even without immoderate communicative aliases industry-specific information, nan LLM outperforms financial analysts successful its expertise to foretell net changes," nan study said. "The LLM exhibits a comparative advantage complete quality analysts successful situations erstwhile nan analysts thin to struggle."

The study utilized "chain-of-thought" prompts that directed GPT-4 to place trends successful financial statements and cipher different financial ratios. From there, nan ample connection exemplary analyzed nan accusation and predicted early net results.

"When we usage nan concatenation of thought punctual to emulate quality reasoning, we find that GPT achieves an accuracy of 60%, which is remarkably higher than that achieved by nan analysts," nan study said. The quality analysts were person to nan debased 50% scope pinch respect to prediction accuracy.

The ample connection models' expertise to admit financial patterns and business concepts pinch incomplete accusation suggests that nan exertion should play a cardinal domiciled successful financial decision-making going forward, according to nan study's authors.

Finally, nan study recovered that applying GPT-4's financial acumen to trading strategies produced much profitable trading, pinch higher stock ratios and alpha that yet hit nan banal market.

"We find that nan long-short strategy based connected GPT forecasts outperforms nan marketplace and generates important alphas and Sharpe ratios," nan study said. 

This communicative was primitively published successful May 2024.