Note: This is the first of a series of articles we’re publishing explaining how you can use artificial intelligence to make money, save time or otherwise improve your life. If you’d like to see more like it, let us know!
I’ve been investing in stocks for 45 years and have made a couple of million dollars doing it.
In this article, I’m going to explain how I recently used AI to pick a stock ETF, illustrating both how I approach picking stocks and how I use AI to make it easier.
This is not, however, in any way, shape or form, an investment recommendation.
The premise
I believe in artificial intelligence. I’ve watched it evolve, use it extensively at work and am convinced it’s the start of a paradigm shift that will rival the industrial revolution or the internet.
It’s going to be exciting, it’s going to be lucrative, and most important, I want to profit from it.
I own stock in most of the major AI players, including Nvidia, Microsoft, Google and Meta. These are the companies on the front line of the AI revolution: the companies making the chips and hardware that make AI possible, and the companies that are buying the hardware and building out infrastructure to support all that computing power.
But the AI trade doesn’t end there. For example, last week I was thinking about investing in downstream companies: smaller companies that will be able to capitalize on AI to improve their products and services while cutting costs.
One area that shows a ton of promise? Health care, specifically biotech. I’ve been reading that medical breakthroughs in biotech will accelerate as AI’s power is harnessed. I’ve also been reading that some of the big pharmaceutical companies are going on a buying binge, scooping up smaller biotech companies to improve their product pipelines.
So there’s my thesis: Buy small biotech companies that will benefit from AI and maybe get taken over at a profit by bigger health care companies.
But to get a second opinion, I talked to ChatGPT. Here’s the exact exchange:
Me: I’m thinking about investing in biotech stocks as a downstream AI play, because I’ve read that medical breakthroughs will accelerate as AI’s power is harnessed. Is that a good investment thesis?
ChatGPT: AI is clearly improving parts of drug discovery (target ID, protein design, trial design), and over a decade this should benefit some biotechs. But:
- Drug development is still slow, expensive, and brutally high‑failure, even with great tools.
- The value created by AI may accrue more to a few “platform” winners and big pharma than to the average small biotech.
- Many “AI biotech” names are story‑stocks with high valuations and very uncertain economics.
If you want to pursue this theme, a more sensible implementation is usually: diversified exposure (ETFs or baskets of established platform biotechs / large caps) rather than concentrated bets in tiny pre‑revenue “AI + biotech” names.
Yes, ChatGPT, I realize that investing in small-cap biotech is high risk and requires diversification. That’s why, although I typically buy individual companies, in this case, I was thinking of an exchange-traded fund, or ETF.
But which ETF?
I could have asked ChatGPT, but I thought I’d try talking to Microsoft Copilot instead. Here’s how that went:
Me: I’m looking for an ETF for small and mid-cap biotech stocks. I’m seeking companies likely to be taken over.
Copilot: The best ETF fit for your goal—exposure to small and mid-cap biotech firms with takeover potential—is the ALPS Medical Breakthroughs ETF (SBIO). It specifically targets companies in Phase II/III trials, a sweet spot for acquisitions. Other strong candidates include the Virtus LifeSci Biotech Clinical Trials ETF (BBC) and the SPDR S&P Biotech ETF (XBI), which provide broader exposure across the sector.
Copilot also presented me with this additional information, along with the sources it drew from so I could read more about each ETF:
As you can see, AI helped me find exactly what I was looking for: an exchange-traded fund that offered a diversified portfolio of small- and mid-cap biotech companies that offer takeover potential, along with lots of risk.
Did I just take Copilot’s word and immediately buy the ALPS Medical Breakthroughs ETF (SBIO)? Of course not. AI is a place to start stock research, not finish it.
After checking out these ETFs, including their annual returns and fees, however, I did end up buying 300 shares of SBIO at $46.33 apiece. As I write this about 3 days later, I’m up about $650. But it’s still early; we’ll have to wait and see how it does over time.
What it means for you
AI was exceedingly useful in helping me evaluate my investment thesis and find potential investments for it.
Because it’s not always reliable, AI can’t be a complete solution. But the amount of work it did for me in seconds would have taken hours just a couple of years ago.
Better information + less time = easier, smarter investing
Bottom line? If you’re not using AI in your investing life, you’re missing out. From when to start claiming Social Security benefits to exploring tax-advantaged investments, it’s a great place to explore ideas, get questions answered and find additional information.
It’s probably the best tool I’ve ever used for money management, and I’ve been doing this for a very long time.
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