Hi, I'm Matt. Welcome back to AI Street. This week’s edition is on the shorter side as I try to shake off a nagging cold. 😷 

The Rundown 

• Young Investors More Likely to Trust AI: Study

• AI Market Movers

• Anthropic Unveils “Computer Use”

• ICYMI: Interviews with Leading AI + Finance Experts

• SEC Names AI as Examination Priority

• AI Adoption in Financial Services

• RavenPack Launches AI-Powered Research Tool

INVESTING
Young Investors More Likely to Trust AI for Investment Advice: Study

New research suggests that investors under 46 are more likely to follow AI-generated investment advice compared to older investors.

The study, conducted by University of Auckland Professor Gertjan Verdickt, surveyed 3,600 U.S. investors, asking them to predict the S&P 500’s return for the next year. Participants were then shown the same forecast (a 5% return), but were randomly told it came from one of the following sources:

• Goldman Sachs analysts

• Goldman Sachs analysts + AI

• Just AI

Participants were then asked if they wanted to change their predictions and how much they trusted the forecast. Verdickt found that younger individuals, particularly those familiar with tools like ChatGPT, were significantly more likely to update their market predictions based on AI recommendations.

Key findings:

• Investors under 46 were more likely to adjust their S&P 500 forecasts when receiving AI predictions

• Those over 46 largely ignored AI advice, preferring their own judgment

• Younger users rated ChatGPT's usefulness around 6.5 out of 7

• Women, Democrats, and those with high AI literacy showed greater trust in AI advice

"It's about familiarity," Verdickt told me. "If you're more familiar with AI, you're more likely to trust it."

However, the research revealed a "complexity aversion" - when investors were given detailed explanations of how AI models work, their trust actually decreased.

The research suggests AI-driven investment tools may see accelerating adoption. For better or worse, we’re already seeing products where AI is in the driver’s seat hit the market.

AI MARKET MOVES

AI Street has started tracking significant stock moves (±3%) to AI developments. While financial firms were quiet on AI this week, several companies across other sectors saw notable AI-driven price action. Returns are from the week ended Oct. 23 when the S&P 500 posted 0.7% decline.

Data provided by Linq Alpha, an AI copilot for hedge funds. 

• Zoom (ZM) +5.2%: Unveiled AI roadmap and partnership with Suki for medical note-taking.

• Netflix (NFLX) +6.7%: Beat 3Q earnings; CEO highlighted AI's potential to enhance content creation while cutting costs.

• Quest Diagnostics (DGX) +5.4%: Strong 3Q earnings, emphasizing AI focus for diagnostic accuracy.

• Thermo Fisher (TMO) -2.6%: In-line 3Q results; noted pharma R&D shift to AI isn't boosting revenue.

• Equifax (EFX) -6.2%: Mixed 3Q results and lowered guidance; AI advances couldn't offset weak non-mortgage outlook.

NEXT BIG THING
Anthropic’s New AI Tool Can Browse, Click, Type on User's Behalf

AI agents have been dubbed the next “big thing” in the world of artificial intelligence. Yet, as with many innovations in AI, there isn’t a standard definition to pin down what an “AI agent” really means. The video below does a great job of showing what an agent can do.

Anthropic, the Amazon-backed startup founded by ex-OpenAI researchers, recently launched a new beta feature that allows its AI, Claude, to use your computer just like you would—from booking flights to planning your weekend, or deciding what to make for dinner.

Check out the demo:

The presenter wants to plan a sunrise hike at the Golden Gate Bridge for a friend visiting San Francisco. She asks Claude to assist with:

• Finding the best viewing spot

• Figuring out the timing

• Creating a calendar invite

Claude goes to work by:

• Opening Chrome and searching Google for viewing locations

• Using Maps to calculate distances from her current spot

• Checking sunrise times

• Creating and populating a calendar invite with all the details

If people can trust AI to book their flights, it’s not far-fetched to imagine asking it for an undervalued stock pick. 🤔

ICYMI
Interviews with Leading AI + Finance Experts

• Finster’s Sid Jayakumar on building AI Agents for Wall Street

• Sov.ai's Dr. Derek Snow on AI for fundamental investors

• Bain’s Richard Lichtenstein on AI adoption in private equity

• Snowflake’s Jonathan Regenstein on AI building novel datasets

• Skadden’s Dan Michael on the SEC’s AI stance

REGULATION
SEC Lists AI as Exam Priority

The U.S. Securities and Exchange Commission has named the use of AI as one of its top exam priorities for the coming year. The SEC will assess whether advisors and brokers are being transparent about their AI usage and if they have adequate policies in place to manage its risks.

Focus areas include:

• Fair Representations: Ensuring firms accurately disclose their AI capabilities and how they use AI.

• Alignment with Investor Profiles: Verifying that AI-driven recommendations align with clients’ profiles and stated investment strategies.

• Client Information Security: Safeguarding client data, particularly when using third-party AI tools.

• Fraud Prevention & AML: Monitoring the role of AI in fraud detection and anti-money laundering efforts.

• Business Continuity: Ensuring firms have contingency plans in place for AI system failures.

• Vendor Management: Overseeing third-party AI providers to mitigate associated risks.

SEC Chair Gary Gensler has been vocal about the risks of “AI-washing,” where companies make inflated or misleading claims about their AI capabilities. Gensler has also expressed concern about the growing dependence on a small number of AI models and data sources within the financial sector, warning that the failure of a central AI system could have systemic consequences.

The SEC, as a disclosure-based regulator, focuses on ensuring that companies’ public statements about AI match reality. I once had a conversation with an SEC enforcement official who joked about the challenge of prosecuting a “Ponzi” coin scheme: How can you claim fraud when they literally told you they were going to defraud you? 🤔

EU Regulator Seeks SEC-Like Powers for European Markets

The EU’s financial markets watchdog is pushing for expanded authority to oversee major stock exchanges, aiming to operate more like a European version of the SEC. The proposal to transfer more powers from national regulators to the European Securities and Markets Authority (ESMA) is gaining traction, as Brussels officials look for ways to increase capital markets activity. (Financial Times)

AI UPDATES
How Financial Service Firms Are Using AI

• Moody’s Analytics has reported slower-than-expected adoption of its AI tools among large financial institutions, mainly due to internal governance requirements. In contrast, smaller firms have shown stronger uptake, with positive early feedback from users. (Thanks to Marvin Labs for flagging.)

• Last week, we covered how Morgan Stanley is using AI to pair clients with financial advisors, leading to 100,000 successful matches year to date. The Daily Upside has some more color:

ALSO: Morgan Stanley rolls out AskResearchGPT to institutional securities staff

INVESTING
RavenPack Launches AI Research Tool For Financial Professionals

RavenPack, a financial data analytics firm, launched Bigdata.com this week, an AI-powered research platform.

Functionality:

• Conversational interface for billions of financial documents

• Real-time data access and monitoring

• Custom watchlists and portfolio analysis

• Mobile and desktop apps

Traction:

• 40+ financial institutions onboard since July beta

• Including: 4 global investment banks

• One top-5 credit hedge fund

• 10 major asset managers

Bigdata.com is backed by a $20 million investment from GP Bullhound and developed by a team of former quantitative analysts and data scientists from major financial institutions, according to a press release.