AI vs the Stock Market: How Tech Stocks, PLTR and ALB Did in May

An illustration of a robotic hand manipulating a line graph, symbolizing the impact of AI on data processing in industries like insurance.

(Image credit: GETTY IMAGES)

As its uses grow, so does our dependence on artificial intelligence (AI). Large language (deep learning) models are now helping us with almost everything in our daily lives, from tackling to-do lists to detecting diseases to picking stocks to buy.

It's that last one that is the focus of this article. Given AI's ability to analyze massive amounts of data in a very short amount of time — a feature that requires an enormous amount of energy — the technology is a natural fit for investors, traders, asset management firms and the like.

As an example, most banks and brokers now offer robo-adviser accounts, which use AI to build and manage investment portfolios at a much lower cost than those maintained by actual people. (Still, financial planning should likely be left to the humans.)

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As for those do-it-yourself (DIY) investors, there are a seemingly endless number of stock-picking platforms such as Danelfin that use AI to spit out lists of the top stocks matching their specific criteria.

I decided to test AI's predictive capabilities, and, on April 30, I asked Google's Gemini AI chatbot where I should invest in May. I also asked for a list of the best stocks to buy for the month.

Here's what it had to say and how its predictions matched actual market movement. All returns are through the May 30 close.

Where to invest

When I asked Gemini where to invest in May, it offered several suggestions of "potential areas to explore," including the technology sector and "select growth stocks."

Companies in the technology sector, specifically those focused on artificial intelligence (AI), "continue to show strong growth potential," Gemini said.

The chatbot also advised to "keep an eye on companies with strong growth momentum," such as Amazon.com (AMZN), which "appears to be a high-quality growth stock with potential."

The stock market closed out May with strong gains as investors cheered positive developments in President Donald Trump's tariff policies, though tensions between the United States and China appear to be on the rise heading into June.

For the month, the tech-heavy Nasdaq Composite emerged as the clear winner — rising 9.6% vs the blue chip Dow Jones Industrial Average's 3.9% gain and the broader S&P 500's 6.2% return.

Growth stocks, as measured by the S&P 500 Growth Index, did well in May, returning more than 9%.

As for Amazon, it finished the month up 11.2%. Truist Securities analyst Youssef Squali sees even more upside for the Dow Jones stock, as evidenced by his $226 price target — 10% above current levels.

"The potential for higher prices from tariffs remains a risk, but Amazon is better positioned than most to weather the storm" thanks to "the marketplace nature of its business model, its expansive scale, its superior logistics network and the diversity of its offerings," Squali wrote in a May 23 note.

Best stocks to buy in May, according to AI

When I asked Gemini on April 30 what the best stocks to buy in May would be, it offered up several suggestions.

To start, it tapped Palantir Technologies (PLTR) as a growth stock "with potential." The chatbot said the company's AI-powered data analytics software "increasingly valuable for businesses and governments," which could lead to "strong revenue growth."

PLTR shares climbed 11.1% in May, outperforming the S&P 500's 6.2% return. Longer term, the AI stock is 74% higher for the year to date and is up more than fivefold in the past 12 months.

Albemarle (ALB) — a lithium producer — is another name that Gemini suggested could be one of the best stocks to buy in May.

"Albemarle's stock has been somewhat beaten down, but it offers a growing dividend and exposure to the electric vehicle market," the chatbot explained.

ALB shares were down 32% for the year to date heading into May and fell another 5% through the month.

Still, Argus Research analyst John Eade thinks the lithium stock is "materially undervalued based on ALB's size, global scale, low-cost operations, and asset portfolio." He thinks the shares are trading at an attractive entry point.

While the current trends in the lithium market are negatively impacting Albermarle's earnings, "the company's balance sheet is solid, and management is taking steps to reduce costs and conserve cash," he adds.

The bottom line on AI vs the stock market in May

Gemini notes that its recommendations are "for informational purposes only and should not be considered financial advice," which I appreciated.

It also reminded me of the risks involved with investing in the stock market, such as losing my money, and advised me to conduct my own due diligence and consider speaking with a financial adviser.

To be sure, I would never blindly invest in anything an AI chatbot recommended — and neither should you. Still, it's an interesting exercise to see how picks made by AI would perform throughout the month.

So much so that I'm doing it again for June. Check back next month to see how AI's stock picks fared. Hint: We're watching industrial stocks and Broadcom (AVGO).

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.