Artificial intelligence (AI) will become a game-changer of the stock market in the future as AI technology and machine learning are more extensively applied to data gathering and analysis, a high-ranking executive of a fast-growing U.S. startup said Tuesday.
Chida Khatua, CEO of the San Francisco-based EquBot LLC, which launched the world's first AI-powered Exchange-Traded Fund (ETF) on the New York Stock Exchange, told Xinhua in an interview that there is an explosion of information everyday, every month and every year.
Khatua said that the market has never before seen so much information flow, or data flow.
"If you see the way that multi-data are piling up very day, there is an incredibly increasing burden of data analysis and processing," he said.
He took Google's AlphaGo as an example. The AlphaGo AI has shocked the whole world by beating the best human Go players early this year.
Khatua said AlphaGo was designed for games and by the means of deep learning, it can accomplish very complex tasks and make the most sophisticated choices.
"In the investment world, people make a lot of choices, you make choices, complex choices. There is some similarity," he said.
"The process of choices is almost as complicated as Alpha Go.
We train our AI models to see how the market will react, let the AI models look at it and see how they behaved. That's the way how AI is trying to make decisions," he said.
Powered by the IBM Watson artificial intelligence platform, the proprietary, quantitative model developed by the company was used to create its portfolio by considering a series of factors such as current economic conditions, trends and world events.
Art Amador, co-founder of EquBot, said the company's AI-Powered Equity ETF, ticker AIEQ, is capable of simulating equity research analysts working around the clock.
The whole process needs no human intervention, he said. "It's almost fully automated, from gathering data, to generating ideas, building portfolios, monitoring performance. They are all based on AI."
The AI ETF utilizes artificial intelligence to replace the portfolio manager to process more market data and generate unbiased investment decisions under a set of investment criteria.
Amador said the application of AI technology will improve the efficiency of the stock market.
"If you have 100 traders in a row, you would need only one or two to see what's happening, but you need a lot more technical people out there to make sure AI is running properly," he said.
He expressed strong confidence in his company's products.
"We're managing, as Chida said, life-saving assets in connection with people's retirement. We take it very seriously, and I have strong confidence in that," he said.