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Disclaimer : The information in this post is intended for informational purposes only and should not be considered investment advice. Prior to making any investment decisions, conduct your own research and consult with a financial advisor.
In the finance world, earnings season is always a busy time for investors. Once those quarterly reports hit, a flood of opinions and analysis pops up on message boards and social media. But how do you make sense of all those investor comments and extract meaningful insights? That’s where AI chatbots like ChatGPT come in.
In this post, we will break down how ChatGPT takes those torrential investor comments and distills them into useful financial insights.
Table of Contents
The Process
The process begins by gathering from a popular investment platform the numerous comments generated by investors in the hours following a company’s earnings release. For this analysis, we gathered comments specifically related to Nvidia’s earnings report issued on August 23, 2023. In this particular case, we obtained a total of 77 comments from this investment platform, representing a sizable quantity that reflects the extensive financial discussion spurred by the release.
We then “feed” these comments to ChatGPT and let it go to work. Within seconds, it thoroughly reads through all the comments to identify the most important points and even determines investor sentiment.
Through a series of prompts, we guide the chatbot to create a concise yet comprehensive summary capturing the main ideas discussed. But it does not stop there. We present more detailed follow-up questions to further probe specific summary aspects. Additionally, to highlight the most significant keywords, we instruct the AI tool to construct a table showing the frequency of these terms along with its assessment of whether they convey positive, negative, or mixed sentiment. Finally, we direct the chatbot to provide an overall numerical score on a scale of 0 to 10 reflecting investors’ feelings about the company.
This entire methodology enables us to swiftly comprehend what investors are saying in response to a company’s earnings report release.
Decoding Investor Sentiment: Insights from ChatGPT
In this section, we will provide the specific questions we asked ChatGPT, along with a high-level summary of the insightful responses it generated.
Provide a summary of these comments regarding NVIDIA’s earnings report
Mostly positive but cautious. Many like the strong earnings and AI leadership. But some worry about the high valuation and share buybacks.
What topics seem most concerning?
Valuation, buybacks, growth potential, and AI impact.
What are the valuation and buyback worries?
High PE ratios raise valuation concerns. The timing of buybacks comes under scrutiny. Initiating them at lower valuation levels could have potentially benefited shareholders more, especially given the questionable outcomes of past buybacks by other companies at high valuations. Some propose redirecting the funds designated for buybacks toward operational reinvestment instead.
What are the top 10 keywords, their frequency, and associated sentiment?
(Source : ChatGPT)
Do long-term and short-term investors differ in their views of the company’s prospects?
Long-term investors see less risk in valuation and like the growth prospects. Short-term investors doubt the buybacks and shareholder impact.
What is the 0-10 sentiment score?
7.5-8. Confidence in growth potential is high. But valuation and strategy concerns create doubts.
Conclusion
Earnings season will always be chaotic. But with the help of powerful large language model tools, such as ChatGPT, we can cut through the noise and zero in on what matters most.
The next time earnings roll around, put the power of AI to work for you. Instead of being overwhelmed by the earnings wave, you’ll be able to surf it smoothly and extract meaningful insights efficiently.
About ChatGPT
ChatGPT is a conversational tool or chatbot that interacts with users by generating human-like text based on its model’s training data and the Transformer architecture. See our previous post The ABC of ChatGPT to learn more.
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