Hi, I'm Matt. Welcome to AI Street, where AI meets Wall Street. Every Thursday, I share curated news, analysis, and expert interviews.

The Rundown 

• LLMs As Financial Analysts

• 5 Minutes with Monica Summerville

• Directory of AI Tools

• Hedge Fund, PE Use Cases

• CA Legal Updates

• AI Adoption

• 🇺🇸 Matt in Milan 🇮🇹 (!)

RESEARCH
Large Language Models as Financial Analysts

A new study examines how well advanced AI models can analyze corporate financial performance. The research, titled "Large Language Models as Financial Analysts," was conducted by Miquel Noguer i Alonso and Hanane Dupouy from the Artificial Intelligence Finance Institute.

The paper evaluates how three models - GPT-4o, Claude 3.5 Sonnet, and Gemini Advanced - analyze the Q1 2024 financial performance of Amazon, NVIDIA, Meta, Apple, and Tesla.

All three models showed proficiency in analyzing complex financial data and providing systematic assessments. But, the level of detail and focus varied among the models, with GPT-4o excelling in comprehensive analysis, Claude 3.5 Sonnet offering quick overviews, and Gemini Advanced striking a balance between the two.

The study compared the models' effectiveness in providing financial insights and ranking investment potential based on metrics such as revenue trends, profitability, cost management, cash flow, and future outlooks.

The researchers also provided rankings based on the models' analyses. Tesla was ranked last by all three.

INTERVIEW
Celent’s Monica Summerville on AI Adoption in Capital Markets

Monica Summerville is a seasoned expert in capital markets technology, bridging the gap between Wall Street and Silicon Valley. With over two decades of experience, she has been at the forefront of financial technology evolution, having managed front-office trading systems and market data distribution for major banks.

Now heading Celent's Capital Markets practice in London, she helps financial institutions navigate emerging technologies, with expertise in AI, cloud computing, blockchain, and data-related technologies.

Monica's career spans roles at ABN Amro, Price Waterhouse, and TABB Group, among others. She has also worked as a U.S. retail broker, holding Series 7 & 63 registrations. Monica holds dual US/UK citizenship.

In this Five Minutes Q&A, Monica shares her candid thoughts on the state of AI in capital markets, its current capabilities, challenges, and future potential.

This interview has been edited for clarity and length.

Where are you seeing generative AI actually being implemented?

Two main areas right now:

1. Code development - It's changing the programming landscape. A lot of coding is reusing and refactoring. Gen AI also helps with documenting old systems and frees up developers to focus on more valuable work.

2. Research - It's expanding analysts' capabilities. An analyst might typically cover 20-30 companies, but gen AI allows them to analyze a much wider universe. It helps summarize information, find correlations, and supercharge their ability to monitor industries.

It's also helping connect research to execution - tracking when portfolio managers act on analyst recommendations and how it impacts performance. This has been difficult before due to disconnected systems.

Read the full interview here.

INVESTING
Balyasny Aims for AI Senior Analyst

Balyasny Asset Management's Applied AI team is making strides in automating financial analysis with their latest tool, Deep Research, according to Business Insider. The hedge fund has enhanced its AI models by training them on financial terminology, achieving 60% better document retrieval compared to general-purpose models like OpenAI's.

• Deep Research can analyze over 20,000 documents from a database of 5 million in about an hour, answering complex financial queries.

• Currently in beta with 50 investment teams, Deep Research is slated for firmwide release in Q4.

• The Applied AI team aims to further develop the system to generate trade ideas, mimicking the role of a senior analyst.

Blackstone Unveils AI Search Tool

Blackstone has created DocAI, a generative AI tool designed to enhance internal search and summarization capabilities for its 5,000 employees, according to Business Insider.

The system, developed over the past 10 months, allows workers to upload and analyze various documents, from proprietary information to external research, aiming to streamline access to relevant data across the firm.

• DocAI is set to roll out firm-wide this fall, following successful pilot programs in various departments.

• The tool offers personalized search experiences, allowing employees to prioritize information specific to their roles.

• Blackstone's CTO, John Stecher, emphasizes the potential time savings and efficiency gains for deal professionals, software engineers, and other staff members.

Startup Raises £1.7 Million for PE Due Diligence

Capsa AI, a London-based startup aiming to improve the private equity due diligence process, has raised £1.7 million in a seed funding round. (TechFundingNews)

AI ADOPTION
AI Adoption Likely to Boost Retraining, Not Layoffs, NY Fed Survey Finds

A recent survey by the Federal Reserve Bank of New York reveals that firms adopting AI are more likely to retrain workers than to reduce staff. Among businesses planning to use AI in the next six months, about half expect to retrain current employees, while only a small percentage anticipate layoffs.

• 32% of service firms and 16% of manufacturers in the New York-Northern New Jersey region plan to use AI in the next six months.

• Firms expect modest wage increases across education levels due to AI adoption, with larger gains anticipated for more educated workers in the service sector.

BIS Study: AI Boosts Programmer Productivity, Especially for Juniors

A Bank for International Settlements study found AI significantly increased programmer productivity, particularly among junior staff. The research evaluated the impact of the CodeFuse large language model on coding output.

• AI-assisted programmers saw a 55% increase in productivity, with one-third directly attributed to AI-generated code.

• Senior programmers showed less pronounced gains, primarily due to lower engagement with the AI tool rather than its effectiveness.

Meta’s Llama Model Used by Banks, Tech Companies

Goldman Sachs and Nomura are among companies using Meta's Llama open source AI models, which has been downloaded ~350 million times since last year. (Reuters)

Nigeria's Central Bank Adopts AI for Monetary Policy

The Central Bank of Nigeria is using AI to assess monetary policy.

“We have been able to improve the accuracy of inflation forecasting models using sentiment analysis generated from social media sites such as Twitter and Facebook,” according to Governor Olayemi Cardoso. (Bloomberg Law)

REGULATION
AI Watermarking Legislation Passed in California

Lawmakers in California have approved a bill that would create one of the nation's most comprehensive laws requiring disclosure of AI-generated content.

The measure now awaits Governor Gavin Newsom's signature or veto. If enacted, it would mandate clear labeling of AI-produced material. (Bloomberg Law)

ALSO: All the news about SB 1047, California’s bid to govern AI (The Verge)

US AI Watchdog to Preview New Anthropic, OpenAI Models Before Release 

OpenAI and Anthropic have agreed to let the U.S. AI Safety Institute test their new models before releasing them to the public. (CNBC)

QUICK LINKS
Chief, Czar, or Committee: Who Rules Over AI?

Financial firms debate AI oversight, with some appointing Chief AI Officers to manage its broad impact and risks. (Global Association of Risk Professionals)

Investment Firms Wary of AI Adoption, CFA Survey Shows

Investment firms are cautious on AI adoption, citing ethical and security concerns. (InvestmentNews)

Anthropic Launches Claude AI for Enterprise

Anthropic launched Claude Enterprise, a new AI product for businesses, offering enhanced features like larger context windows and improved collaboration tools. Jane Street and Bridgewater Associates are clients, per Claude’s website. (CNBC)

🇺🇸 Matt in Milan 🇮🇹 
Email Etiquette (!)

For those that are new here, I moved to Milan in July after 15+ years in NYC. 

Most of my journalism career has focused on U.S. issues. Occasionally, I’d write a story or two outside this prism, but that was pretty rare. So I mainly communicated with Americans.

But AI Street has given me the opportunity to exchange emails with folks from all over the world — Dubai, Singapore, Edinburgh, Israel, and more. I’m beginning to realize that Americans have a special affinity for ! exclamation points in emails.

It’s pretty customary to say “Thanks!” “Much appreciated!” You might even get a double !!

So after living in Milan all of two months, exclamation points now just read LOUD to me. I guess that’s American 🇺🇸 

See you next week!!! 😆 

Thanks for reading!

Drop me a line if you have story ideas, research, or upcoming conferences to share. [email protected]