More and more individual investors are turning to artificial intelligence for stock research and investing to gain an edge over the market.
A Reddit user recently said he used AI startup Anthropic’s Claude Opus 4.6 large language model to build a stock-picking system based on Berkshire Hathaway Inc. (NYSE:BRK, BRK.B)) Chair Warren Buffett‘s investing philosophy. The goal of the experiment was simple: test how effective AI could be at selecting stocks and see how that model-driven portfolio might have performed in hindsight.
The Redditor fed the LLM Buffett’s investor letters from 1977 through 2024, asking it to extract the most common investing principles and build a scoring system around them. The model was given a blind sample of 50 stocks with financial data only: 20 Berkshire-style holdings, 15 value candidates and 15 speculative stocks.
The AI portfolio generated about 134% in returns since 2020 in a backtesting simulation, outperforming Buffett’s equal-weight portfolio and the S&P 500, according to the Reddit user. Buffett’s actual weighted portfolio still led with about 165% returns, mainly due to Berkshire’s large Apple Inc. (NASDAQ:AAPL) position.
Let’s take a look at some of the important and surprising picks of the AI model.
Alphabet
Alphabet Inc. (NASDAQ:GOOGL, GOOG)) was the biggest holding in the portfolio designed by AI. The stock is up 71% over the past year. Berkshire Hathaway owns a $5.59 billion stake in the company as of the end of December.
Visa
Visa Inc. (NYSE:V) shares are down 12% over the past year. Berkshire has a $2.91 billion stake in the payments giant as of the end of last year.
Procter & Gamble
Though Berkshire Hathaway has owned Procter & Gamble Co. (NYSE:PG) in the past, the stock is not part of its current portfolio. PG shares are down 4.3% over the past 12 months.
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Coinbase Global
Coinbase Global Inc. (NASDAQ:COIN) was the biggest surprise pick in the portfolio. Buffett has historically stayed away from cryptocurrency and has often spoken against it. The Reddit poster said the AI algorithm likely selected Coinbase because its financial metrics made it look more like a value-style investment than a crypto play.
“It does a good job of looking like a value stock with ~39% profit margin and low debt right now,” he said. “Depending on how you see this experiment, the Coinbase pick could mean a good thing or a bad thing.”
Texas Instruments
Texas Instruments Inc. (NASDAQ:TXN) was another stock that drew attention since Berkshire has never owned the company. One Redditor commented that the semiconductor company is a “textbook” Buffett pick because it has a strong market dominance in analog chips, stable cash flows, and capital return history.
Moody’s
Moody’s Corp. (NYSE:MCO) shares recently took a hit along with other financial data stocks amid concerns that AI could disrupt the industry. The stock is down 13% over the past month. Berkshire owns a $12.6 billion stake in the company.
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This article Latest AI Model Reads 48 Years Of Warren Buffett Advice And Builds Stock Portfolio For Today's Market — Here Are Top 6 Stock Picks And Performance originally appeared on Benzinga.com
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