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.

digital human brain covered with networks
(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 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. 

Dan Burrows
Senior Investing Writer,

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.