Benefits and Limitations of ChatGPT and Large Language Models in Investment Analysis of Private Companies
Traditionally, this process has been labor-intensive, requiring in-depth analysis of financial performance, legal compliance, market positioning, management capability, and reputation.
Investment due diligence is an essential, albeit complex, component of making informed decisions about private firms. Traditionally, this process has been labor-intensive, requiring in-depth analysis of financial performance, legal compliance, market positioning, management capability, and reputation. Recently, advancements in artificial intelligence (AI) have introduced tools like ChatGPT that promise to streamline this process. However, the efficacy of these tools in private firm investment analysis remains a subject of debate due to several inherent limitations. This article explores the benefits and limitations of ChatGPT and other large language models (LLMs) in the context of private firm investment analysis, offering a balanced perspective rooted in recent research and practical examples.
The Rise of AI in Investment Due Diligence
AI models, such as ChatGPT, developed by OpenAI, are designed to perform tasks that typically require human intelligence. These include natural languag…