Impact of Artificial Intelligence in Stock Ma...

Impact of Artificial Intelligence in Stock Market Predictions

Author Name : Aadit Chugh

DOI: https://doi.org/10.56025/IJARESM.2026.14072610 

ABSTRACT Artificial Intelligence (AI) has emerged as a transformative force in financial markets, fundamentally changing the methods used for stock market prediction and investment decision-making. Traditional forecasting techniques, which primarily rely on historical price trends and statistical models, often struggle to capture the complexity and volatility of modern financial markets. AI-driven technologies, including Machine Learning (ML), Deep Learning (DL), Natural Language Processing (NLP), and Reinforcement Learning (RL), have significantly enhanced predictive capabilities by processing large volumes of structured and unstructured financial data in real time. These technologies analyze historical market data, corporate financial statements, macroeconomic indicators, social media sentiment, and global news to identify hidden patterns and forecast stock price movements with greater speed and precision. This paper examines the impact of AI on stock market predictions by evaluating its advantages, limitations, and practical applications in algorithmic trading, portfolio management, risk assessment, and investor decision-making. The study adopts a descriptive and analytical approach based on an extensive review of academic literature, industry reports, and real-world case studies involving AI-enabled trading platforms. The findings indicate that AI has improved forecasting accuracy, minimized human biases, enabled real-time market analysis, and enhanced operational efficiency for institutional and retail investors. However, challenges such as data quality, algorithmic bias, market unpredictability, overfitting, cybersecurity risks, and regulatory concerns continue to affect the reliability and ethical implementation of AI-based financial systems. The paper concludes that while AI cannot eliminate uncertainty inherent in stock markets, it serves as a powerful decision-support tool that complements human expertise and has the potential to reshape the future of financial forecasting and investment strategies.