AI Threatens Junior Equity Analyst Roles

The rise of generative AI is transforming equity research by enabling quicker data analysis and faster report generation. However, this advancement may put junior analyst positions at risk, especially in large asset management firms where efficiency is a top priority.

Investment banks and funds are now rapidly adopting AI tools to strengthen their research capabilities. Companies like Aiera, backed by major banks and technology firms, are expanding their platforms to handle thousands of stocks and events each year. Originally created to transcribe earnings calls, Aiera now uses generative AI to conduct real-time sentiment analysis and benchmark financial language models across global markets.

Macquarie is a notable early backer of Aiera, having supported the New York-based startup since its initial funding round. Over the past month, Aiera secured another $38 million through a Series B round with the involvement of ten of Wall Street’s largest institutions. The company has also partnered with Microsoft to provide AI tools for both buy-side and sell-side firms, including investment managers, corporates and fintech operators.

The long-term impact of this shift could be significant. Firms are hoping these technologies will streamline operations, reduce research costs and unlock new insights. While analysts may still be needed to oversee and interpret the software's output, entry-level tasks like data gathering and standardisation are increasingly likely to be automated.

Across the financial sector, major institutions such as Goldman Sachs, Morgan Stanley and JPMorgan are also deploying generative AI tools. These are already being used to summarise lengthy documents, extract insights from vast internal databases and support staff in client-facing roles.

Executive sentiment around AI is mixed. A recent Capgemini survey of 1,500 executives at companies earning more than $1 billion annually found that generative AI could create up to $450 billion in value by 2028. However, confidence in fully autonomous systems has declined. Key concerns include inaccurate outputs, limited human oversight and the risk of processes going off course. Many executives are now calling for fail-safe mechanisms to shut down AI systems if needed.

Overall, AI appears set to reshape equity research practices. Rather than replacing all analysts, it is the roles that rely more on repetitive tasks and less on judgement that are most at risk.

Source: Australian Financial Review, CFA Institute Blogs, Fortune

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