AI Predicts European Stocks to Outperform Market in Next 3 Months – How Did It Go In Q1?
Artificial intelligence suggested three European stocks that beat the market in the first quarter of 2024. What will be the next outperformer? l Source: Michael M. Santiago/Getty Images
Key Takeaways
- Artificial intelligence (AI) analysis successfully identified stocks that outperformed the market benchmark in the first three months of 2024.
- AI also identified Adyen, Koninklijke Ahold Delhaize, and Air Liquide as potential outperformers in the second quarter.
- However, investors shouldn’t rely on AI for their investment choices.
Artificial intelligence (AI) is making waves in the financial world and also changing the way investments are suggested. Machines can sometimes accurately predict the future, as they did in the first quarter of 2024 when asked to provide names of stocks that would have outperformed the broader market.
While AI offers valuable insights, investors shouldn’t rely only on it for their investment strategies. AI is a tool that can offer a comprehensive strategy. But it also brings risks when suggesting where to put money.
The fintech company Axyon AI , which specializes in artificial intelligence models for institutional investors’ portfolios, applied its proprietary software to predictive analysis of Eurostoxx 50 securities, comprising the top 50 European companies by market capitalization. Three of these stocks were earmarked at the quarter’s outset for closer scrutiny: Adidas, Schneider Electric, and Prosus.
These selections outperformed the Eurostoxx 50 index – which grew by 12% in the first quarter -, with respective gains of 35%, 17%, and 16%. Notably, Adidas emerged as the standout performer within Axyon’s broader selection of 20 companies forecasted to outperform the market.
Of the 20 companies identified, 13 surpassed the 122% benchmark, constituting a remarkable 65% of the basket. While two-thirds of the predictions proved accurate, a portfolio comprising the top 10 performers yielded a robust return of 13% – surpassing the benchmark once again.
In a comprehensive analysis of investment sectors, Axyon AI’s software accurately predicted a notable trend favoring companies in the discretionary and industrial consumer goods sectors. This foresight, outlined in the fintech’s commentary on forecast, reflects a growing focus on sectors poised to capitalize on evolving consumer trends. Both sectors, represented by continuous futures in the analysis, delivered impressive returns compared to the Stoxx 600 index: +13.7% for the retail sector and +9.3% for industrial goods and services, outpacing the index’s +7.6% performance.
Who’s Going To Beat The Market In Q2
In the current quarter, Axyon’s advanced analytics have identified three standout prospects. The Dutch fintech Adyen emerges as a top contender, boasting a high relative performance score and a strong likelihood of outperforming the benchmark index. Key indicators point to Adyen’s exceptional resilience in volatile market conditions.
Next, Ahold Delhaize , a major player in the large-scale retail trade sector, garners attention due to its advantageous position in navigating economic uncertainties. Lastly, French industrial gas producer Air Liquide earns recognition for its adeptness in adapting to market fluctuations.
In addition to these top picks, Axyon recommended monitoring 17 other European stocks, including Italian car giants Stellantis and Ferrari. Other notable mentions encompass renowned companies such as Anheuser-Busch, Siemens , Airbus, and LVMH.
While technological sectors dominate the rankings, consumer discretionary and industrial sectors emerge as prominent contenders within the top 20 companies. This insight underscores the diversification and resilience observed within the European market.
AI Algorithms Not a Perfect Science
Axyon’s approach is not about always being right. But about making numerous calculated bets, recognizing that while some may falter, the majority will yield profits – a strategy aimed at overall gains, as explained by the Emilian fintech. To achieve this, the model harnesses vast amounts of data to identify relationships and estimate expected returns across securities, indices, and ETFs within model portfolios.
AI-driven robo-advisers are democratizing investment, making professional financial insights and portfolio management accessible to all. Despite their advantages, robo-advisers have notable drawbacks.
AI can personalize investment advice to align with individual preferences, such as prioritizing ethical investments in environmental, social, and governance stocks. All without the need for a financial adviser.
However, one major concern regarding AI in this sector is the potential for individuals to overestimate their financial capabilities. And also to take excessive risks due to easy access to advanced investment tools. The complex algorithms utilized by robo-investors can be opaque. They can make it challenging for some investors to grasp the associated risks fully.
Furthermore, the rapid evolution of robo-advisers has outpaced the development of laws and regulations. This leaves investors vulnerable to financial risks and lacking adequate legal protection. An issue yet to be adequately addressed by financial authorities.
