Can Stocks Picked by Artificial Intelligence Beat the Market? 3 Stocks to Watch
An artificial intelligence stock-picking platform identifying high-potential equities has been sharp in the past. Here are three of its top stocks to watch over the next few months.
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Artificial intelligence leveraging the raw power of Big Data might just be the edge tactical investors and traders need to navigate one of the toughest years in market history.
Rising interest rates, the highest inflation in four decades and mounting fears of recession have the S&P 500 mired in a bear market. At times like this, it's fair to say market participants need all the help they can get finding stocks to watch.
Artificial intelligence (AI), machine learning and big data are hardly new to the world of stock picking. But, traditionally, they've been available only to institutional investors with deep pockets.
Danelfin is trying to change all that. The financial technology firm's AI-driven analytics platform aims to level the playing field, giving regular folks access to institutional-level technology. The platform, which offers both free and premium plans, uses artificial intelligence to analyze more than 900 fundamental, technical and sentiment data points per day for 1,000 U.S.-listed shares (opens in new tab) and 600 stocks listed in Europe (opens in new tab).
After churning through 10,000 daily indicators (opens in new tab), Danelfin's algos produce a series of scores. The AI Score, which ranges from 1 to 10, indicates a stock's probability of beating the market over the next 30 to 90 trading sessions. (Higher scores are better.) Danelfin also assesses stocks' volatility and their potential for nasty drawdowns. Stocks with superior Low Risk Scores should help tactical investors and traders sleep better at night.
The last step is to combine AI Score with Low Risk Score to suss out stocks that offer not only the highest probability for short-term outperformance, but also the lowest risk of loss.
If nothing else, Danelfin's system has certainly earned its keep in 2022. The fintech's top 10 stock picks generated a price return of 10.8% from Oct. 4 (the last time we highlighted Danelfin's picks) through Dec. 13. That handily beat the S&P 500, which gained 6% over the same span.
Below please find three stocks to watch, based on Danelfin's AI platform awarding them the highest AI Risk/Reward Scores as of Dec. 14. For good measure, we also took a look at what Wall Street analysts have to say about these names' prospects over the next 12 months or so.
And remember: We're talking about the probability of a stock beating the market over the next few months or so, not days, and not years. That means the platform is pointing to the best stocks to buy for tactical investors and traders, not necessarily long-term investors.
Share prices and other market data as of Dec. 14. AI Scores and rankings courtesy of Danelfin as of Dec. 14. Analysts' consensus recommendations and other data courtesy of S&P Global Market Intelligence, unless otherwise noted.

Coca-Cola
- Market value: $278.7 billion
- AI Score: 10
- Low Risk Score: 9
- AI Risk/Reward Score: 9.5
Coca-Cola (KO (opens in new tab)) is a case study in how the best dividend stocks never go out of style. Or at least that's been true for the top-rated Dow dividend stocks thus far in 2022.
Just look at shares in this soft drinks juggernaut. KO stock is up nearly 9% for the year-to-date on a price basis alone. Not only does that beat the broader market by a whopping 24 percentage points, but both industry analysts and Danelfin's AI platform say Coca-Cola stock has more room to run.
KO stock gets a perfect 10 AI Score, bolstered by near-perfect readings for fundamentals, sentiment and technical strength. Combine that with a Low Risk score of 9, and Coca-Cola stock should outperform the broader market over the next 30 to 90 trading sessions with minimal downside risk.
The Street, which typically looks 12 to 18 months ahead, is bullish on the fizzy drinks maker over the longer term too. Of the 26 analysts covering KO tracked by S&P Global Market Intelligence, 12 rate it at Strong Buy, seven say Buy and seven have it at Hold. That works out to a consensus recommendation of Buy, with high conviction.
The bottom line is that whether you're a trader, tactician or long-term investor, analysts and AI agree that Coca-Cola stock is a buy at current levels.

Verizon Communications
- Market value: $158.7 billion
- AI Score: 10
- Low Risk Score: 9
- AI Risk/Reward Score: 9.5
Verizon Communications (VZ (opens in new tab)) is having a bad year. On a price basis alone, the only telecommunications stock in the Dow Jones Industrial Average is down about 28% for the year-to-date. That lags the broader market by around 13 percentage points.
Danelfin's AI platform, however, believes VZ stock is a beaten-down buy – at least for those looking to generate some multi-month alpha.
Verizon's perfect 10 AI score is supported by a long series of blemish-free readings on fundamentals. Indeed, VZ stock has notched a perfect 10 score for fundamentals for more than six straight months. Reliably high assessments of sentiment and technical strength also suggest VZ stock is ready for a breakout.
And as for risk? Telcos are known for nothing if not for their dividends, defensive characteristics and low volatility. With a Low Risk score of 9, Verizon stock should let investors sleep well at night.
Wall Street, which looks further ahead, is mixed on the name heading into 2023. Five analysts call VZ a Strong Buy, one says Buy, 21 have it at Hold and one slaps a rare Strong Sell rating on shares. That works out to a consensus recommendation of Hold.
Incidentally, after its dreadful performance this year, Verizon is very much a stock to watch for investors who ascribe to the popular Dogs of the Dow investing strategy for 2023.

PepsiCo
- Market value: $255.2 billion
- AI Score: 10
- Low Risk Score: 10
- AI Risk/Reward Score: 10
That two of the largest makers of carbonated beverages and other soft drinks should make the list of top stocks picked by AI shouldn't really come as a surprise.
As we noted some time ago, PepsiCo (PEP (opens in new tab)), Coca-Cola and other industry peers are great stocks to own when markets are volatile and inflation is running hot. Indeed, dividends, defense and inflation protection have helped PEP stock gain more than 6% on a price basis so far this year.
That leads the broader market by more than 20 percentage points. And AI says Pepsi stock isn't done generating alpha just yet.
PEP stock gets perfect 10 scores across the board from Danelfin's algos, making it the runaway top stock to watch for outperformance over the next few months. Consistently high readings for fundamental, technical and sentiment indicators inform PEP's perfect score for projected outperformance.
Meanwhile, PEP has always been a low volatility stalwart. With a five-year beta of 0.59, PepsiCo stock can sort of be thought of as being about 40% less volatile than the broader market.
Just know that PEP is more popular with AI for short-term outperformance than it is with the Street as a market-beater looking 12 to 18 months out. Of the 23 analysts issuing opinions on PEP, six rate it at Strong Buy, five say Buy, nine have it at Hold, two say Sell and one calls it a Strong Sell. That works out to a consensus recommendation of Buy with only modest conviction.
Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
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