Can AI Beat the Market? 10 Stocks to Watch

An artificial intelligence (AI) system identifying high-potential equities has been sharp in the past. Here are its 10 top stocks to watch over the next few months.

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(Image credit: Getty Images)

Artificial intelligence leveraging the raw power of Big Data might just be the edge tactical investors and traders need to navigate one of the worst starts to a year 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 (opens in new tab) 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 AI to analyze more than 900 fundamental, technical and sentiment data points per day for 1,000 U.S.-listed shares and 600 stocks listed in Europe.

After churning through 10,000 daily indicators, 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 the first half of 2022. The fintech's top 10 stock picks generated a price return of 2.1% from March 11 (the last time we highlighted Danelfin's picks) through June 27. That clobbered the S&P 500, which fell 7.5% over the same span.

Here are 10 stocks to watch, based on Danelfin's AI platform awarding them the highest AI Risk/Reward Scores as of June 28. 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 June 29. AI Scores and rankings courtesy of Danelfin as of June 28. Analysts' consensus recommendations and other data courtesy of S&P Global Market Intelligence, unless otherwise noted.

Dan Burrows
Contributing Writer, Kiplinger.com