AIs Changing Markets?

Is the ability of artificial intelligence (AI) platforms such as ChatGPT to summarize and interpret large volumes of financial data altering investor trading behaviors and thereby changing financial markets? In the April 2025 revision of their paper entitled “ChatGPT and the Stock Market”, Jenny Stanco and Kee Chung examine the impact of ChatGPT on stock trading, volatility, liquidity, and price efficiency. For their analysis, they separate firms into those with abundant publicly available information (high-info) and those with limited information (low-info), employing firm size and age as proxies for information availability. They further use Google search volumes to estimate levels of attention firms may get from ChatGPT. They use the year before (after) ChatGPT launch on November 30, 2022 as the pre-launch (post-launch) subperiod. Using daily trading volumes and return volatilities, and earnings forecasts/announcements/actuals data, for a broad sample of U.S. stocks from the end of November 2021 through the end of November 2023, they find that: (more…)