Wells Fargo’s Artificial Intelligence Defies Analysts, Slaps “Sell” on Google and Facebook

Google, which makes almost all of its money on ads and internet user data, is undertaking herculean efforts to get a grip on artificial intelligence (AI). It’s trying to develop software that allows machines to think and learn like humans. It’s spending enormous resources on it. This includes the $525 million acquisition in 2014 of DeepMind, which is said to have lost an additional $162 million in 2016. Google is trying to load smartphones with AI and come up with AI smart speakers and other gadgets, and ultimately AI systems that control self-driving cars.

Facebook, which also makes most of its money on ads and user data, is on a similar trajectory, but spreading into other directions, including a “creepy” run-in with two of its bots that were supposed to negotiate with each other but ended up drifting off human language and invented their own language that humans couldn’t understand.

And here comes an AI bot developed by stock analysts at Wells Fargo Securities. The human analysts have an “outperform” rating on Google’s parent Alphabet and on Facebook. They worked with a data scientist at Amazon’s Alexa project to create the AI bot. And after six months of work, the AI bot was allowed to do its job. According to their note to clients on Friday, reported by Bloomberg, the AI bot promptly slapped a “sell” rating on Google and Facebook.

Human analysts on Wall Street are famous for their incessantly optimistic ratings and outlooks. They generally only put a “sell” on a stock after it has already plunged. They’re part of Wall Street’s human hype machine. Their job is to help inflate stock prices and make CEOs feel good so that they will do business with the analysts’ firms and send fees their way. But Wells Fargo’s AI bot hasn’t gotten the memo.

Last month, a group led by Ken Sena, head of Global Internet Analyst at Wells Fargo Securities, introduced this “artificially intelligent equity research analyst” or AIERA. Its “primary purpose is to track stocks and formulate a daily, weekly, and overall view on whether the stocks tracked will go up or down,” Sena, said at the time.

So “she” did Big Data analysis of Alphabet, Facebook, and some other stocks, and after seeing what’s there, averted her eyes in disgust and slapped a “sell” recommendation on both stocks and a “hold” recommendation on 11 other cherished stocks.

But the bot wasn’t ready yet to replace the human analysts – and the “sell” rating shows why. Until this bot learns to produce perma-hype, as human analysts know how to pump out so efficiently, she would have to be kept on a leash, so to speak.