Learning AI #6

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Learning AI

Each week, we will select two of the AI engines and pose a question or a problem, summarize the findings in our own words, and include the interactions with the AI for your review.

This is a topic many of you have asked me about, so let’s give it a try.

We posed the following question to ChatGPT and Claude:

Pick three stocks that you think will move higher (on a percentage basis) than the S&P 500 over the next four weeks. Give rationale for your picks.

First, a little background on the stock market. When people say, “the market,” they are usually referring to the S&P 500, which is a basket of 500 stocks that cut across all sectors of the economy.

There are many ways to invest in the stock market, but one of the easiest is to buy a stock fund that represents the S&P 500. Super easy and, as you will see, super effective.

Over the last 20 years, the S&P 500 had an annual average return of about 11%. This means if you put $1,000 into an S&P 500 index fund 20 years ago, it would be worth more than $8,000 today. Pretty good!

Remember that the 11% per year is not a smooth line, but the average over a long period of time. During those 20 years, the S&P may have gone down 30% one year and up 35% in a different year.

In this analysis, we are using the S&P 500 as the benchmark, since it represents the “market.”

Let’s do a little sidebar before we go to the AI analysis. Do you know what percentage of money managers (the guys that charge you 2% of your asset balance for their genius stock picks) actually beat the S&P over a 20-year period? About 10%. They don’t look so genius to me.

Can AI do better? We set this up as a four-week experiment since I didn’t think many of you wanted to wait around for a generation to see how things played out.

I asked the AI engines to each pick three stocks that, as a group, would beat the S&P over the next four weeks. 

For example, if the ChatGPT portfolio goes up 50% over the next four weeks, but the S&P went up 51%, ChatGPT loses, just like most stock pickers. But the AI is smarter, right?

ChatGPT picked Nvidia, Tesla, and Apple.

It said that Nvidia is the leader in the AI world, hard to argue with that, and that positive news announcements in the coming weeks could drive the stock higher.

ChatGPT went with Tesla as a “momentum” play. Momentum investing is another name for FOMO investing. Investors may pile into Tesla stock when it announces an EV lawn mower or some other world-changing device according to ChatGPT.

The last pick for ChatGPT was Apple. Its “thinking” was something like “when investors want to rotate back into technology investing, Apple is first on everyone’s list.”

Claude picked Rhythm Pharmaceuticals, Alphabet (Google), and Norwegian Cruise Lines.

Rhythm has an FDA approval decision for a new drug on March 20^th . If the drug is approved, Claude thinks the stock could soar. But Claude does warn this is a hit or miss investment.

Next was Google’s parent company, Alphabet. It characterized Alphabet as a conservative investment but pointed to a huge backlog of contracts that will turn into revenue in the next year and the recent success with its autonomous vehicle company Waymo and the surge of its AI engine, Gemini to the top of the AI rankings.

Claude’s final pick was Norwegian Cruise Lines. The rationale for this pick is that a big hedge fund is trying to take over the company and the battle for control will drive the price up.

My view of the stock picks, as if this really matters, is that ChatGPT went with popular stocks and I found its rationale for the picks to seem lazy. I know a machine can’t be lazy, but that’s what I felt when I read its picks.

It picked Rhythm Pharmaceuticals (I bet you never heard of the company) and identified the “catalyst” that stock pickers always look for (the FDA approval hearing). Norwegian Cruise Lines was also the product of more legwork by the AI as it surfaced the takeover battle as a catalyst.

So, I liked Claude’s approach and rationale more than ChatGPT’s but it’s the results that matter. I will include a table like the one below each week for the next four weeks so we can track ChatGPT vs Claude vs the S&P 500.

Here is the link if you want to check the table in real time during the week.

Table of AI Stock Picks Updated in Real Time

There is an old investing adage that a monkey picking stocks by throwing darts at a page of stock listings can do better than the professional stock pickers. Let’s see if the AIs are better than that monkey when we finalize results in four weeks.

Things I think about

More people have been to space than to the Mariana Trench, the deepest part of the ocean.

Response from ChatGPT

Pick three stocks that you think will move higher (on a percentage basis) than the S&P 500 over the next four weeks. Give rationale for your picks.

Here are three stocks that could outperform the S&P 500 on a percentage basis over the next four weeks, along with the rationale behind each pick. (Note: This is not financial advice—just a reasoned view based on current market trends and news.)

📈 1. NVDA (NVIDIA)

Rationale:

• Nvidia continues to be a leader in the AI hardware market, with renewed investor interest following a major AI chip deal with Meta Platforms driving recent gains.

• Analysts remain positive on the AI demand trend and structural growth in data centers and cloud computing, which can be a near-term driver of stock performance.

• In volatile or tech-driven markets, Nvidia’s momentum and high institutional and retail interest could translate to short-term outperformance relative to the broader index.

Why it might beat the S&P 500:
Large cap tech stocks often lag in sideways markets, but strong news catalysts around AI can trigger outsized short-term moves.

📈 2. TSLA (Tesla)

Rationale:

• Tesla remains a highly momentum-driven stock and often exhibits greater volatility than the broad market. That volatility can work in its favor over short horizons.

• Retail investment flows into Tesla have remained significant, suggesting continued interest that could support near-term gains.

• Tesla’s ongoing developments in EV demand, potential AI initiatives, and new product announcements can act as catalysts that swing the stock more than the S&P 500 index.

Why it might beat the S&P 500:
Volatility + investor attention often leads to larger percentage swings in either direction—good for short-term traders if it trends up.

📈 3. AAPL (Apple)

Rationale:

• Analysts and market strategists have included Apple among names likely to benefit from a rotation back into big tech if tech sentiment stabilizes.

• Apple’s strong balance sheet, broad product ecosystem, and potential catalysts (e.g., services growth, product refreshes) could give it an edge in a near-term rally.

• Even if tech has lagged recently, Apple is often a beneficiary of risk-on sentiment, and modest gains there could outpace the S&P 500’s average if the index drifts sideways.

Why it might beat the S&P 500:
It’s a core market leader that often participates strongly in rallies—if tech turns positive, Apple could outperform.

📊 Summary Table

🚨 Important Considerations

• The next 4 weeks is a very short time horizon, and stock movements can be dominated by news and sentiment rather than fundamentals.

• Stocks with higher volatility can outperform (or underperform) significantly relative to an index like the S&P 500 over short windows, but they also carry higher risk.

• Past performance doesn’t guarantee future results.

If you’d like, I can also suggest lower-risk alternatives (like ETFs or sector plays) tailored to your goals and risk tolerance.

Response from Claude

Pick three stocks that you think will move higher (on a percentage basis) than the S&P 500 over the next four weeks. Give rationale for your picks.

⚠️ Important disclaimer first: This is not financial advice. I'm not a financial advisor, and short-term stock picking — especially over 4 weeks — is genuinely unpredictable. Even professional fund managers rarely beat the index consistently. Please don't make investment decisions based on this alone.

That said, here are three picks with concrete near-term catalysts in the next 4 weeks, based on current data:

1. Rhythm Pharmaceuticals (RYTM) The clearest binary catalyst on the board right now. The FDA is scheduled to announce its decision on approving Imcivree for acquired hypothalamic obesity by March 20, 2026 — squarely within the 4-week window. Positive news would likely cause shares to soar. NCHStats This is a high-risk/high-reward setup: biotech FDA decisions can go either way, but the trial data was favorable and the market hasn't fully priced in approval. If it passes, the move could be significant. If it doesn't, the downside is equally sharp — so position sizing matters.

2. Alphabet (GOOGL) A more defensive "outperformer" pick. Google Cloud's backlog soared 55% quarter over quarter and more than doubled year over year to $240 billion TRADING ECONOMICS, and as that converts to revenue, earnings should climb meaningfully. Alphabet has delivered strong gains over the last 12 months even with a recent pullback NCHStats, which creates a better entry point. With AI monetization through Gemini, Waymo's autonomous vehicle momentum, and strong cloud growth, it has multiple near-term tailwinds that should outpace a cautious broader market.

3. Norwegian Cruise Line (NCLH) The shortest-term catalyst of the three. Activist investor Elliott Investment Management recently disclosed a stake of more than 10% and launched a campaign demanding a board overhaul and operational reform, sending the stock soaring 12% in a single day. Statista Activist campaigns typically keep a stock elevated for weeks as the market prices in potential change — cost cuts, asset sales, or leadership changes. NCLH has been a chronic underperformer and Elliott's involvement could be the forcing function the stock has needed.

The honest caveat: RYTM is genuinely speculative (binary FDA event), GOOGL is the most "reasonable" conviction play, and NCLH is a momentum/event-driven bet. None of this accounts for macro shocks, tariff news, or Fed surprises that could move the whole market — which over just 4 weeks can easily swamp any stock-specific thesis.

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