Artificial intelligence-powered investing is not garnering as much attention as it used to, but it just might be making a comeback in the age of meme stocks and Reddit traders.
Just look at the Van Eck Vectors Social Sentiment ETF (BUZZ). The fund, famously backed by Barstool Sports' Dave Portnoy, uses artificial intelligence technology to screen for stocks with positive investor sentiment. It has amassed about $250 million in assets and was up 12.9% since its launch four months ago.
EquBot, another ETF provider most well-known for launching the first artificial intelligence-powered equity ETF, also offers a family of funds poised to take advantage of the meme investing trend. The firm leverages IBM Watson-powered artificial intelligence to gather millions of data points every day to build on multiple predictive models.
"Utilizing IBM Watson and our own proprietary algorithms, our model is focused on what and who is moving the markets and how fast, so it helps us understand better not just what to invest in but when," Chris Natividad, chief investment officer of EquBot said in a recent interview.
The timing is important. Despite the meteoric rise of AMC and GameStop this year, their upward trajectories are punctuated by periods of sharp declines. That's why EquBot's model averted GameStop when it was first surging in January.
During that initial spike, the model captured a huge spike in keywords sentiment through various social media channels, but it was also aware that GameStop is predominantly driven by other metrics such as in-store sales, the supply and demand dynamic for its products, and different foot traffic metrics, Natividad said.
"What happens is there's a dynamic waiting because the system sees the market price is really dislocated from the traditional set of signals that have correlated to the GameStop price, and the confidence in the predictive financial model decreases," he added. "Ultimately, it's not going to take on that position, which was the right move as far as the timing when the system was ingesting that information."
Because the two funds offered by EquBot — AI Powered International Equity ETF (AIIQ) and AI Powered Equity ETF (AIEQ) — are both actively managed, their portfolio turnover rate is on the higher end typically at around 2% per day. However, depending on the day and market dynamics, sometimes the data-dependent models would not signal any trades, Natividad said.
With a bird's eye view of market sentiment and trends, Natividad recently shared five global stocks showing strong growth signals, as predicted by the AI model. The five stocks, along with their tickers, market caps, and commentaries, are listed below. (Natividad's stock commentaries are as of June 30.)
1. Atlassian Corporation
Market cap: $64.88 billion
Commentary: "Global companies are adapting to the evolving remote workplace environment. Atlassian has created a growing productivity software suite that is changing how teams work virtually. Shares are up north of 15% year-to-date and closed a couple dollars short of its 52-week high at 267.96."
Market cap: $181.82 billion
Commentary: "Often dubbed the "Canadian Amazon" Shopify seemingly achieves higher ratings for smaller ecommerce players. Shopify was positioned in the sweet spot during global pandemic lockdowns and its stock has increased over 65% in the past year. Ecommerce data continues to grow and there is an increased level of stickiness to consumer behavior in repeated electronic transactions free of complications."
3. Crispr Therapeutics
Market cap: $12.28 billion
Commentary: "Technological advancements proximal to healthcare and pharmaceutical sectors have elevated levels of interest as a result of the significant feats accomplished throughout the COVID pandemic. CRISPR is a gene editing leader with Nobel prize-winning ties. Transformative DNA healthcare applications can have profound impact. Shares are down year to date about 18% and last traded at 129.20 but the EquBot system is showing strong positive long term signals related to aggregate market perception and management team influence."
4. Spotify Technologies
Market cap: $51.91 billion
Commentary: "Spotify is the leading streaming music provider and the platform user counts continued to grow throughout the outbreak of COVID-19. Spotify has been in competition with tech behemoths for years and is still leading the charge. Data on streaming music as well as podcast participation for Spotify continue to be encouraging."
Market cap: $16.28 billion
Commentary: "The ecommerce software company from Israel providing cloud-based web development services is yet another tech example that has found itself positioned for continued growth as global economies recover. The platform experience seems to be well received across a variety of consumer mediums and shows elevated sentiment scores from business partners and equally constructive analyst ratings from Wall St. We did see WIX stock prices pull back as a result of proximal geopolitical conflict earlier in the year but it is seemingly back to marching up another strong year from a stock price perspective."