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If Lloyds Bank research is to be believed, a whopping 28m of us Britons use ChatGPT to influence our personal finance decisions. This includes carrying out stock market research and looking for share recommendations. Could the model tell me which direction the BP (LSE:BP.) share price will go next?
ChatGPT said…
I’m not convinced by artificial intelligence (AI) models and their ability to provide sage investing viewpoints. I’ve found its rationale behind stock picking ideas and broader personal finance recommendations to be questionable. Much of the information it bases its views on can also be hopelessly wrong.
But hey, in the interests of public service I’ve asked ChatGPT to provide a near-term forecast for BP’s shares. Who knows? It could at least provide some interesting nuggets for consideration, even if it doesn’t answer my question.
I asked it: “Will the BP share price rise or fall over the next 12 months?” Its answer was:
I lean to a modest rise rather than a sharp climb.
Good and bad
ChatGPT said that “if oil/gas prices hold up or improve and BP executes cost controls, the share price could rise by perhaps 10% to 20% over 12 months“.
It added that the FTSE 100 company “benefits from higher oil & gas prices, strong dividend yield, and scope for share buybacks if cash flows improve“.
In the interests of balance, ChatGPT also said that “there’s material risk of flat performance or even a decline if oil prices drop, or BP misses on buybacks/dividends“.
The AI added that “if these fall (due to global slowdown, regulatory risk, supply changes), the share price could drop.”
Wrong answers
On the whole, ChatGPT’s answers were hardly illuminating. Oil price risk is a severe and constant danger to energy stocks, and one that the AI didn’t really address in terms of today’s supply and demand picture.
The other information it provided was fairly standard, too, and contained nothing that market commentators and analysts haven’t been speculating on for months (if not years). But most worrying to me was the fact ChatGPT’s prediction that BP’s shares could rise 10%-20% was based on out-of-date information.
This assumed a share price rise from 444p per share today to 492p. BP’s share price actually sits around 464p, which would represent a far more modest 6% increase.
More price forecasts
I took a look at City forecasts for BP after consulting ChatGPT. The 29 analysts with ratings on the stock have attached an average price target of around 501p per share, up 8% from today’s levels.
But as you can see, analysts aren’t united in their bullishness, with some sharp share price falls also predicted:
BP’s share price could indeed surge if oil prices rise. However, there’s also a high danger of the reverse scenario transpiring as both OPEC+ nations and other countries ramp up crude production. With the Footsie company also scaling back its green energy ambitions, it’s far too risky for me as the transition towards renewables and nuclear heats up.
