Generative artificial intelligence (GenAI) is rapidly becoming an important tool for retail investors researching companies and making investment decisions. Nearly half of surveyed investors said they had used GenAI to process financial information or inform investment decisions, according to new research examining how investors are incorporating the technology into their investment activities.

Joe Croom, assistant professor of accounting at Indiana University’s Kelley School of Business, and his co-authors analysed more than 410,000 investor queries submitted to a major brokerage’s GenAI chatbot and surveyed nearly 2,200 investors. The study provides insight into not only how frequently investors use GenAI, but also the kinds of financial questions they ask and how their use changes over time.

“Investors most often use GenAI to help make sense of complex financial information and better understand what is driving market movements,” Croom said. Investors initially tend to use the technology to screen stocks and conduct high-level company evaluations. As they become more familiar with it, however, they increasingly use GenAI for detailed monitoring and interpretation of company-specific news.

Rather than simply asking GenAI which stocks to buy, investors frequently use it as a research assistant. They may ask questions about the health of a company’s profit margins, its financial performance or factors affecting its stock. In this role, GenAI can help investors navigate large volumes of financial information and make complex material easier and faster to understand.

The findings appear in “Generative AI and Investor Processing of Financial Information,” forthcoming in the Journal of Accounting and Economics. Croom’s co-authors are Elizabeth Blankespoor, professor of accounting at the University of Washington’s Foster School of Business, and Stephanie Grant, associate professor of accountancy at the University of Illinois’ Gies College of Business.

Although many investors experimented with the chatbot only briefly, 17.7% became routine users. “Almost half of investors have used GenAI, and nearly a fifth of those use it routinely,” Croom said, noting that the data were collected in 2024 and adoption has likely increased since then. Among surveyed investors, 65% cited faster information processing as a benefit, while 59% valued GenAI’s ability to simplify complex information.

Among investors who had used GenAI, 74% believed it improved their information processing and 80% planned to continue using it. At the same time, users identified significant concerns, including reliability and accuracy (54%), data privacy (50%) and response quality (46%). Non-users were more sceptical, with 55% uncertain that GenAI would improve information processing, although only 24% said they were unlikely to use it.

The researchers also found that investors with greater financial experience and sophistication were leading GenAI adoption and using its advanced capabilities most effectively, raising questions about whether the technology will narrow or widen knowledge gaps among investors. Croom said the findings have implications for regulators developing investor education and safeguards, as well as companies communicating with GenAI-using investors. The research was based on data provided by Public, an investment brokerage and financial technology company.

More information: Elizabeth Blankespoor et al, Generative AI and Investor Processing of Financial Information, Journal of Accounting and Economics. DOI: 10.2139/ssrn.5053905

Journal information: Journal of Accounting and Economics Provided by Indiana University