A new study by US researchers from the University of Indiana suggests that robo-analysts make more profitable stock recommendations than human financial analysts.
Indiana researchers reviewed 76,568 reports produced by seven robo-analyst companies over a period of five years, concluding that robo-analyst buy recommendations outperform those of human analysts.
The study found that robo-analysts produced a more balanced distribution of buy, hold, and sell recommendations than a human specialist as a cyber-stockpicker does not depend on periodic company earning reports, instead focusing on reams of data released in the annual reports.
Although financial analysts continue to be worried about losing their jobs, researchers found that human analysts appear to outperform software when it comes to sell recommendations.
It remains in debate, however, how seriously large-scale institutional investors take stock recommendations made by algorithms, as the study revealed that investors do not depend on signals given by recommendation revisions of robo-analysts when incorporating and trading.