How to use AI Prompts for Stock Analysis: A Step-by-Step Guide

Speed Up Your Investment Process with AI-powered Stock Research

As an investor and financial analyst, I’ve been exploring how I can use Generative AI /Large Language Models (LLMs) and Stock analysis prompts to speed up my information gathering and research process. A typical deep dive into one business, including reading the annual reports, plotting historical data, reading disclosures as well as about the industry, its competitors can take a while. Plus I have a comprehensive stock research checklist (download for FREE here) which I fill out and respond to the questions therein, which takes quite some time too. From my experience the overall stock research process may take a full month.

Hence, I’ve been playing around with Perplexity Spaces to help me speed up the information gathering process. I found Spaces useful because it’s free, and I can upload up to 5 files for its consumption. What that does is that the answers are more specific as the LLM will prioritise information directly from the attachments (if it’s available) before digging for it on the internet.

I combined the computing power of Perplexity Spaces with the power of my checklist, to create built-in AI prompts for each checkpoint. These AI prompts for Stock Analysis allows me to streamline the information-gathering process.

In this post, I share my experience on how to leverage this powerful tool, especially when combined with a comprehensive stock research checklist. You could also use other, similar Gen AI tools like Chat GPT, Gemini, or DeepSeek and get similar results.

I also recorded a video on this to walk through the steps:

Utilizing Perplexity Spaces for Business and Stock Research

Perplexity Spaces is an AI-powered research and collaboration hub that allows users to consolidate their research efforts across both internal and external sources of data. This feature is particularly useful for stock analysis, as it enables us to gather information from various sources efficiently.

Here’s the step-by-step guide on how to use Perplexity Spaces for my research:

1. Create a dedicated space: I start by creating a new Space for each company or stock I’m researching.

2. Upload relevant documents: Even as a free user, I can upload annual reports, quarterly filings, and other relevant disclosures directly into the Space. This allows the AI to access and analyze company-specific information. I tried various combinations of documents to see which documents to upload in the five slots for optimal results.

In one instance, I uploaded multiple years of annual reports or filings. However that didn’t work well because the responses were at times generated based on older annual reports or filings. Hence my suggestion is to upload only the latest set of annual and quarterly filings for the stock as well as its biggest competitors. You might also consider uploading an industry research report, should you have access to one.

3. Leverage web search: Perplexity Spaces combines information from uploaded documents with web search results, providing a comprehensive view of the company and its market position.

4. Use AI prompts: I input specific queries or prompts to generate insights on various aspects of the business. This is where the checklist comes in.

Integrating a Stock Research Checklist

To enhance my research process, I’ve developed a 43-point stock research checklist with AI prompts here. This checklist covers crucial aspects of stock analysis, including:

Business understanding
Market position and competitive advantages,
Growth potential
Industry dynamics
Financial strength
Capital allocation
Management integrity, and a
Conclusion section, including the articulation of key Risks.

Here’s how I use it in combination with Perplexity Spaces:

1. Copy and paste prompts: I take the AI prompts from my checklist and paste the prompt into Perplexity Spaces. This generates responses based on both the uploaded documents and web search results.

Once I have a response, I read through it, see if it makes sense and if it accurate. I will copy and paste relevant portions of the response back into my checklist under the ‘responses’ column.

2. Systematic analysis: The checklist ensures I cover all critical aspects of the company, reducing the risk of overlooking important factors.

3. Time-efficient research: By using built-in prompts, I significantly reduce the time spent on information gathering and initial investigations.

*Stock Research Checklist with AI Prompts*

As standard instructions to the LLM, I specifically ask it to not generalise the answers, to stick to facts, and to double check its own research. This helps in reducing the mistakes and generalisations that all LLMs are prone to. An important caveat is that the responses can still be incomplete or incorrect. So we, as analysts, still need to fact-check everything. But being a checker is faster than being a doer.

Benefits of Using This Approach

1. Reduced information gathering time: The combination of Perplexity Spaces and my checklist prompts automates quite a few elements (although not all the initial research process). This allows me to gather a wealth of information in a fraction of the time it would take through traditional methods.

2. Streamlined investigations: With the 43-point checklist, I ensure a comprehensive analysis of each stock. The AI-generated responses provide a solid foundation for deeper investigation, allowing me to focus my time on critical thinking and decision-making rather than basic data collection.

3. Consistency: Using a standardized checklist ensures that I apply the same rigorous analysis to each stock, reducing the risk of oversight or bias.

4. Holistic view: The checklist covers various aspects of a company, from financial metrics to qualitative factors like management integrity. This comprehensive approach helps me form a well-rounded opinion on each investment opportunity.

5. Collaboration potential: Perplexity Spaces allows for team collaboration, making it an excellent tool for investment firms or groups of analysts working together on research projects.

The combination of Perplexity Spaces and my stock research checklist has improved my investment research process. It allows me to conduct efficient, and consistent analyses of stocks and businesses.

AI-driven Research, Human-Driven Thinking

While Perplexity Spaces and AI-driven research tools have improved my approach to stock analysis, it’s key to acknowledge its limitations and the critical role of human judgment:

AI as a research assistant: AI doesn’t make investment decisions for me, but, it reduces the time required for collecting information. You can ask it to find the answer to a question you’re curious about.
Critical thinking remains essential: The real work is to evaluate the information provided by AI and consider factors that might not be apparent in the raw information.
Contextual understanding: AI may struggle with the latest market sentiments, geopolitical nuances, or emerging trends that haven’t yet been widely documented. I view the AI-generated information within the context of the broader market environment.
Emotional intelligence: Investing often involves understanding human behavior and market psychology. AI can’t fully grasp the emotional factors that often drive market movements.
Decision making: AI is a powerful tool but the decision always rests with me.

By leveraging AI for research and information, I’m able to focus on critical thinking and decision-making processes that are truly the fun part of investing.

This combination of AI capabilities and human thinking is, in my opinion, the future of investment research.

If you are keen to give this a try, you can either:

Get the FREE stock investment checklist here and generate your own prompts OR
Buy the Checklist with AI Prompts for Stock Analysis below (for just A$10) and radically boost the stock research process.