ChatGPT was one of the big stories of 2023. As part of the generative AI’s rise to prominence, ChatGPT stock picks have become all the rage. Google “Chat GPT stock picks,” and you get 10,300 results. InvestorPlace’s very own Luke Lango discussed investors using ChatGPT to select stocks in August 2023, pointing out that 47% of adults in the U.S. have asked the generative AI app for help.
It’s not surprising that the numbers are so high, retail investors will do almost anything to feel like they’ve got an edge. However, I can guarantee failure if you put all your eggs in one ChatGPT basket. Although I’ve never asked ChatGPT for stock suggestions, I don’t have a problem leaning on those who have.
Therefore, I’ll use three different sources for three different ChatGPT stock picks that I believe make sense with or without language learning models doing the heavy lifting.
Adobe (ADBE)
In December, Yahoo Finance gave ChatGPT the following promt:
“Assume the role of a professional stock advisor and recommend 15 stocks that can make me rich in the next five years. For each stock mention the reason behind recommendation.”
One of the 15 was Adobe (NASDAQ:ADBE), a stock I’ve recommended many times, the most recent being this past November when I said it could be one of the next trillion-dollar companies.
At the time, I suggested that its share price could hit $700 by Nov. 2024. Since the article, its shares are up 4.1%, about one-fifth of the performance of the S&P 500. Despite the lag, it’s still got plenty of time to reach the lofty number.
Of the 38 analysts covering its stock, 25 rate it a “buy”, compared to only two rating it a “sell”, with the remaining 11 on the fence as a “hold.” More importantly, the target price is $650, 15% higher than where it’s currently trading, only $50 from my aggressive target.
NextEra Energy (NEE)
Like most utilities, NextEra Energy (NYSE:NEE) hasn’t experienced good share price performance in the past year. NEE is down more than 23%, while the Utilities Select Sector SPDR Fund (NYSEARCA:XLU) has lost about one-third of that amount over the same period. However, over the past five years, it’s up nearly 18%, about 3x the XLU’s performance.
Finbold contributor Justinas Baltrusaitis recommended five undervalued ChatGPT stock picks in early January, with NEE making that list. The author liked the dual revenue streams that Florida Power & Light (regulated) and NextEra Energy Resources (unregulated) provide investors.
Last November, I recommended NextEra stock, suggesting that higher interest rates had wrongly scared away investors. As dividend stocks go, they’re a keeper, having increased their dividend for 29 consecutive years. Further, I said it hadn’t traded so low since 2020.
On Feb. 16, NextEra announced that it would increase its quarterly dividend by 10% with the March payment to $0.515. The $2.06 annual payment yields an attractive 3.7%. It plans to grow its dividend by 10% annually through at least 2026, and has now increased its annual dividend for three consecutive decades.
Of the 21 analysts covering NEE, 17 rate it a “buy”, with a $71.51 target price, 30% higher than where it’s currently trading. NextEra is one of the best utilities in America and worth owning for the long haul.
Berkshire Hathaway (BRK-A, BRK-B)
Finder.com’s UK site created a 38-stock fund in March 2023 from ChatGPT stock picks. As of Feb. 26, it was up nearly 32%, roughly double the return of the country’s top 10 most popular funds. One of the 38 names was Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), Warren Buffett’s holding company. With great stocks like BRK-B recommended, I may have to try ChapGPT in the future.
In the meantime, Berkshire is on the cusp of joining the trillion-dollar club. As of Feb. 23, it had a market capitalization of $953 billion, just a few billion from becoming an official member. Unlike Tesla (NASDAQ:TSLA), once it joins, it’s likely to remain a member for years to come. The next stock in line for $1 trillion, Eli Lilly (NYSE:LLY), is more than $200 billion behind, so if anyone’s going to join the club in the first half of 2024, it will be Berkshire.
The company reported Q4 2023 results on Feb. 24 with earnings of $37.35 billion for the year, 17% higher than a year prior. Berkshire finished the year with a record $167.6 billion cash on its balance sheet. If Cash were a company in the index, it would be the 46th largest.
In a fitting tribute to Charlie Munger, Berkshire’s Vice Chairman and long-time friend of Warren Buffett, who passed away last November, the 2023 Berkshire shareholder’s letter called Munger the “architect” of Berkshire Hathaway. The two men were in a dynamic partnership. However, they both worked very hard to ensure the company continued after both were gone. Together, they’ve created an excellent company designed to last for decades, and I have no doubt it will.
On the date of publication, Will Ashworth did not have (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.
