The vision of handing portfolio decisions over to ChatGPT—or any large language model—is still a distant one, according to Gappy Paleologo, partner at Balyasny Asset Management and former quant at Citadel and Hudson River Trading.
Speaking on Bloomberg’s “Money Stuff” podcast, Paleologo argued that while generative AI has created significant buzz in financial circles, it isn’t yet capable of performing the deep, intuitive work that investment professionals rely on.
“Choosing a stock isn’t just about crunching data—it’s a high-level cognitive task,” he said. “And that complexity isn’t something LLMs replicate well.”
Paleologo’s message to wealth managers and investment advisors: the algorithms may be impressive, but they’re still removed from the lived, qualitative experience of engaging with businesses, markets, and people. While language models can analyze text, summarize earnings calls, and even mirror analyst tone, that’s not the same as building conviction.
“Our inputs are far richer than just text strings and video transcripts,” he explained. “Human investors absorb information through conversation, firsthand observation, and pattern recognition developed over years.”
That grounding in the real world—something Paleologo described as “messy intuition”—is still central to sound portfolio construction. For now, it’s the differentiator that keeps seasoned advisors and portfolio managers relevant, even as automation accelerates.
Still, Paleologo doesn’t discount AI’s potential. He sees a near future where platforms like Bloomberg adopt AI-native interfaces—using natural language prompts to replace legacy terminal functions and streamline data access. For advisors, that could mean a faster, more intuitive way to surface insights, visualize trends, and produce client-ready commentary.
“This shift is coming, one way or another,” Paleologo said. “A solid baseline system—something that enhances access without pretending to replace human judgment—that’s already a big win.”
His comments land at a time when Wall Street’s enthusiasm for AI remains elevated. Since ChatGPT’s debut in late 2022, investor appetite for AI-related names has driven a tech rally that continues to dominate major indexes. Today, just seven stocks—Apple, Amazon, Alphabet, Meta, Microsoft, Tesla, and Nvidia—account for roughly a third of the S&P 500’s total market cap.
But not everyone is buying the hype. Advisors are now weighing whether the AI trade has staying power, particularly in the face of macro headwinds like inflation, tariffs, and softening consumer demand. Some strategists, including Callie Cox, are warning that the rally could lose steam as economic conditions shift.
Others, like Richard Bernstein, are drawing parallels to the late 1990s. “This feels a lot like the dot-com bubble,” Bernstein recently told clients. His firm, Richard Bernstein Advisors, manages $15 billion in assets and has been cautious about overexposure to AI-driven momentum.
Paleologo shares that caution. He believes AI will become an indispensable tool for advisors and investment teams—but not a replacement for them.
“There’s a gap between what these models can say and what an investor actually knows from experience,” he said. “And that gap matters.”
For RIAs and wealth professionals, the message is clear: embrace the technology, but don’t overestimate it. Use AI to automate the routine and accelerate analysis—but keep the human perspective at the center of every investment decision. In an environment where trust, context, and insight define value, artificial intelligence remains a complement—not a substitute.
