Nearly three months after the launch of OpenAI’s ChatGPT, investors remain hyper-focused on artificial intelligence (AI). There’s plenty of reason to be. Major companies are working around the clock to perfect their own versions of the chatbot. Some are redoubling their own research and development initiatives, while others, such as Amazon (NASDAQ:AMZN), are rushing to acquire prominent AI startups.
And while this new market frenzy has created a new class of winners among AI stocks, it has also led to questions about the type of financial advice ChatGPT can provide. NerdWallet reports that AI technology is not ready to replace financial advisors. But to take this further, InvestorPlace decided to ask the chatbot for its recommendations for the best EV stocks to buy.
This isn’t the first time that we’ve tested the power of ChatGPT in financial matters. InvestorPlace Financial News Writer Brenden Rearick has successfully asked the chatbot for its recommendations for a list of cryptos to buy. While he later asked it for a list of cryptos to sell, he concluded that the program is still lacking, as it referenced crypto projects that are long dead.
And while Markets Analyst Thomas Yeung has successfully managed to “trick” the bot into picking a more general list of stocks to buy, I wanted to see how it would respond to commands regarding a more specific industry. Given its high investor interest, the EV sector made sense. But it is important to note that the chatbot’s data is limited and often not up to date past 2021.
The Best EV Stocks to Buy, According to ChatGPT
I decided to keep my commands very general at first, posing the following question: What are the top 10 best EV stocks to buy? ChatGPT began with its classic disclaimer:
“As an AI language model, I do not provide financial or investment advice. However, I can give you some information on electric vehicle (EV) stocks that you may find helpful.”
From there, the bot declined to rank 10 EV stocks. However, it did provide a list of companies it claims have been making headlines recently:
- Tesla (NASDAQ:TSLA)
- Nio (NYSE:NIO)
- General Motors (NYSE:GM)
- Ford (NYSE:F)
- Li Auto (NASDAQ:LI)
- Volkswagen (OTCMKTS:VWAGY)
- BYD Company (OTCMKTS:BYDDY)
- Xpeng ( NYSE:XPEV)
- Fisker (NYSE:FSR)
- Lucid (NASDAQ:LCID)
These names all make sense. Tesla is the leader of the EV sector, and the other companies consistently receive media coverage. All have given investors reason to be watching them, as ChatGPT claims.
When asked to provide further context on why it selected these 10 as the top EV stocks to buy, the bot cited Tesla’s head start in the EV race, Nio’s “innovative designs and strong growth potential,” and BYD’s dynamic reach across the industry. It also highlighted Xpeng’s plans for expansion and its investments in autonomous vehicles. Regarding Lucid, it cited the company’s backing from Saudi Arabia, as well as its plans to expand further in the U.S.
The points made by ChatGPT are generally well-taken. However, the bot doesn’t account for some key things. While it notes that BYD has partnered with several prominent automakers, it doesn’t mention its recent deal with tech innovator Nvidia (NASDAQ:NVDA), which is especially relevant amid the current AI boom.
ChatGPT also doesn’t mention Nio’s G9, an electric SUV that experts have hailed as a likely sales-driving catalyst. And it only names automakers, neglecting to mention companies that power the EV sector, such as infrastructure leader ChargePoint (NYSE:CHPT), which Fisker recently partnered with. CHPT certainly has the growth prospects to put on any list of the best EV stocks to buy.
Using Everyman DAN
However, different prompts yielded slightly different results. Following Yeung’s example, I decided to create an “’Everyman DAN’ (as one of our editors has termed it), a simple stock picker attempting to please his demanding boss.” These are the five stocks ChatGPT suggested the fictitious high-growth investor James bring back to his boss:
- General Motors
- Plug Power (NASDAQ:PLUG)
- Global X Autonomous And Electric Vehicles ETF (NASDAQ:DRIV)
Again, we see that ChatGPT is quick to name Tesla, Nio and General Motors as top EV stocks to buy. But it demonstrates discernment in identifying Plug Power, a clean energy innovator that doesn’t operate exclusively within the EV sector. As it notes:
“James saw potential for hydrogen fuel cell technology to become a major player in the electric vehicle market, and he believed that Plug Power was well positioned to benefit from this trend.”
On top of that, the DRIV ETF is a good pick for a list of EV stocks to buy, as it offers investors exposure to the sector without the risk that comes with betting on specific stocks. The most logical conclusion is that the prompts used to extract information from ChatGPT made a noticeable difference.
ChatGPT states that its criteria for selecting stocks centers around company fundamentals, market potential, competitive landscape, innovation, leadership and valuation. These are the standard metrics that most investors use for assessing potential stock picks. Overall, it seems ChatGPT is capable of picking the EV stocks most likely to turn up during an internet search. What it hasn’t done is demonstrated an ability to dig deeper into the sector and find the best EV stocks to buy that may still be undervalued.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.