Summary
Researchers have found that large language models (LLMs), specifically GPT-4, can analyze financial statements and predict future earnings more accurately than professional human analysts. The LLM outperformed both human analysts and specialized machine learning models, such as artificial neural networks (ANNs), in forecasting the direction of earnings changes. This performance was achieved even when the LLMs were provided only with standardized financial statements without any narrative or industry-specific information. The study highlights the potential for LLMs to significantly impact financial decision-making by offering superior prediction capabilities and generating valuable narrative insights about a company’s future performance.
Business Opportunities
- Investment Analysis Services: Develop AI-driven financial analysis platforms that leverage LLMs to provide more accurate earnings forecasts and investment recommendations to investors and financial advisors.
- Automated Financial Reporting: Create tools for companies to automatically generate detailed financial analysis reports, helping them understand and communicate their financial health more effectively.
- Risk Management Solutions: Offer AI-powered solutions for risk assessment and management, utilizing LLMs to predict financial risks and advise on mitigation strategies.
- Personal Finance Management: Develop personal finance apps that use LLMs to analyze users’ financial statements and provide personalized investment advice and financial planning.