- Insider's Phil Rosen asked ChatGPT to explain Warren Buffett's investing strategy.
- The viral language tool shared how value investing has given Buffett an edge, and broke down his best investment decision.
ChatGPT, whose parent is getting a $10 billion investment from Microsoft, has shown its competence in writing stock stories, dating-app messages, and even an email announcing layoffs.
As it turns out, OpenAI's viral language tool fared well in its breakdown of Warren Buffett's investing approach, too.
I asked ChatGPT to explain the Oracle of Omaha's most important strategy that helped him reach his legendary billionaire status, and within seconds the bot spat out an analysis of value investing.
"Warren Buffett's most important investing strategy is value investing, which involves identifying undervalued companies with strong potential for growth and a durable competitive advantage, and then holding onto those investments for the long-term," ChatGPT said. "He also follows a principle of investing in businesses he understands, with a focus on companies with predictable earnings and a strong track record of increasing profits."
That said, when I inquired what Buffett's most important decision has been in his career, ChatGPT pointed to his investment in Berkshire Hathaway decades ago. Buffett "transformed it into a holding company and used it as a vehicle to make a series of successful investments and acquisitions," the bot said.
ChatGPT's stock picks for Buffett
To fully carry out the interrogation, I tasked ChatGPT with naming stocks that Buffett could add to his portfolio.
While the bot doesn't have access to real-time markets data and its knowledge only goes up to 2021, it had plenty of historical intel to work with, given Buffett's long career.
It named PepsiCo and Unilever as stocks that would make sense for Buffett to invest in, given they're consumer goods companies with strong brand recognition and consistent revenue growth. Buffett famously consumes five cans of Coke a day, but he had been a Pepsi drinker for nearly 50 years before that.
As for Unilever, Buffett had come close to sealing a deal on the company along with Kraft Heinz in 2017, but it eventually fell through.
ChatGPT also named Amazon, which Buffett already owns, and Microsoft, which Buffett owns an indirect stake in via ownership of New England Asset Management, as two examples of blue-chip companies with a track record of innovation.
Then it listed Johnson & Johnson and Pfizer — Buffett owns the former, and has previously owned the latter — as two stable healthcare options that would fit Buffett's strategy.