How You Can Use ChatGPT to Identify Undervalued Stocks Before Wall Street

Wall Street has long had the upper hand, using cutting-edge algorithms to spot undervalued stocks before the rest of the market catches on.

But now, AI is leveling the playing field. With ChatGPT, you can analyze financial data, uncover hidden market sentiment, and identify mispriced stocks — without needing a team of analysts or expensive research tools.

Here’s how:

1. Fundamental Analysis

ChatGPT can help you break down financial statements, assess key valuation metrics, and compare companies within an industry.

How to Use It:

• Analyze Earnings Reports: Copy and paste earnings call transcripts or 10-K filings into ChatGPT and ask for key takeaways, revenue trends, and risk factors.
  

• Compare Valuations: Ask ChatGPT to compare a company’s P/E ratio, price-to-book, and free cash flow against competitors.
  

• Estimate Intrinsic Value: Use ChatGPT to calculate Discounted Cash Flow (DCF) models based on revenue growth assumptions.

Example Prompt:

"Analyze the latest earnings report for [Company X] and highlight any signs of undervaluation."

2. Sentiment Analysis & Market Trends

ChatGPT can summarize market sentiment from news articles, earnings calls, and social media — helping you gauge whether a stock is undervalued due to negative sentiment or legitimate risks.

How to Use It:

• Summarize News Sentiment: Paste recent headlines or analyst reports and ask ChatGPT to detect bullish or bearish sentiment.
  

• Identify Contrarian Opportunities: ChatGPT can spot companies that are fundamentally strong but trading at a discount due to temporary negative sentiment.
  

• Check Insider & Institutional Activity: While ChatGPT can’t access real-time dark pool data, you can input recent 13F filings or insider buying trends and ask for analysis.

Example Prompt:

"Summarize the recent news sentiment around [Company Y] and determine if negative coverage is justified or an overreaction."

3. Develop a Custom Investing Strategy

While ChatGPT can’t access real-time market data (besides what’s published online), you can use it to refine stock screening strategies.

How to Use It:

• Generate Stock Screens: Ask ChatGPT for criteria to screen undervalued stocks (e.g., low P/E, strong cash flow, low debt).
  

• Backtest Investment Strategies: ChatGPT can help design and analyze different investment strategies based on historical market behavior.
  

• Identify Potential Turnaround Stocks: ChatGPT can help you find struggling companies with improving fundamentals.

Example Prompt:

"Create a stock screening strategy for finding undervalued growth stocks with strong free cash flow and low debt."

4. Predicting Market Trends & Sector Rotations

Understanding broader market trends helps identify industries where undervaluation exists. ChatGPT can analyze macroeconomic data and sector performance to pinpoint opportunities.

How to Use It:

• Interpret Economic Indicators: Ask ChatGPT to analyze how CPI, GDP growth, or interest rates affect undervalued sectors.
  

• Spot Sector Trends: ChatGPT can summarize which industries are gaining momentum and which are lagging.
  

• Compare Historical Trends: Ask ChatGPT how previous rate hike cycles or recessions impacted specific sectors.

Example Prompt:

"How do rising interest rates impact undervalued tech stocks, and which sectors historically benefit?"

ChatGPT as Your AI Assistant

Retail investors can now leverage ChatGPT to perform deep fundamental analysis, uncover market sentiment, and refine investing strategies — often in a fraction of the time it would take manually.

And I say take every edge you can.