Can New AI Tools Help Make the Stock Market Eco-Friendlier?

AI is helping disrupt the stock market in surprising ways, such as helping foster greater environmental friendliness.
AI leads to a more eco-friendly stock market
Shutterstock Photo License - By iQoncept

AI technology has started to play a very important role in the financial industry. A number of financial services companies have found creative ways to utilize AI tools.

The stock market has been highly influenced by advances in big data and artificial intelligence. A lot of investors are using AI to boost the performance of their portfolios and find the right level of risk. However, there are other purposes of using AI as well.

One way that AI can change the stock market is by helping adapt eco-friendlier solutions.

AI Could Be the Key to Creating a More Environmentally Friendly Stock Market

New President Joe Biden has definitely made an impact during his first four months in charge, but perhaps one of his most important decisions has been to appointment former Secretary of State John Kerry as the 1st US Special Presidential Envoy for Climate.

Kerry, who also signed the Paris Climate Accord on behalf of the US in 2016, has also spoken at length about how big banks and financial institutions are continuing to invest heavily in green business. This is an interesting soundbite, especially given Biden’s so-called “America Jobs Plan” and its focus on green transport and infrastructure.

As a result, firms are beginning to move beyond standard ESG practices and actively engage in R & D, in order to ensure that they align with the global climate movement.

But which stocks are leading this charge, and is green really the future color of the stock market? How is artificial intelligence going to play a role in creating a greener stock market?

The Leading Green Global Stocks Rely on AI Technology

There are a lot of ways that AI is connected to the sustainability of the stock market. AI technology can directly lower the carbon footprint of stock trades. However, AI is also being used by the companies that practice more sustainable business practices.

Several stocks are already using AI to benefit from the green revolution in the US (and indeed further afield), with Tesla offering a relevant case in point. Tesla has used deep learning and big data technology from the very beginning. The company has found that AI has been incredibly helpful.

How is AI used by Tesla? Tesla has collected data on 1.3 billion miles, which has helped them get a better sense of the needs of their vehicles. They developed a machine learning model with a deep neural network that can help with fleet management. This AI network has proven to be surprisingly efficient and robust.

While the Tesla (TSLA) stock has dipped significantly of late following the decision of CEO Elon Musk to stop accepting Bitcoin as a viable payment option (he had previously invested $1.5 billion in the market leading cryptocurrency back in February), it has largely be embarked on an upward trend over the course of the last 18 months.

Such growth has been particularly pronounced during the last year, with a single Tesla share worth $160.67 on May 14th, 2020. However, this stock now boasts a value of $584.85, representing an increase of more than 200% in barely 12 months.

What’s more, Tesla could yet be one of the biggest beneficiaries of Joe Biden’s $2 trillion infrastructure plan. After all, the proposal has set aside $15 billion for the purpose of rolling out electric vehicle charging stations nationwide, with the goal of reaching 500,000 by 2030.

This is a signal of intent when it comes to the rollout of electric vehicles, which will benefit Tesla in the long-term and provide a viable option for stock traders. It also shows that AI technology can be invaluable for eco-friendly businesses.

So, is the Stock Market Really Turning Green Due to Advances in AI?

Similar green stocks have also seen outstanding growth of late, including FuelCell Energy Inc., Canadian Solar and Quantumscape. Many of them have relied on AI, just like Tesla.

The question that remains, however, is whether this obvious trend for green stocks is likely to persist indefinitely? What role will AI continue to play in the future?

Certainly, there’s some real momentum around such equities at present, especially when you consider the Biden administration’s clear stance on climate change and the wider movement that’s unfolding across the globe.

From a commercial perspective, firms are also beginning to realise the changing attitude of consumers, who are increasingly focused on prioritizing sustainable and ‘green’ brands. They are also becoming more reliant on AI to help them identify sustainable opportunities with such brands.

In fact, 67% of consumers are thought to consider the use of sustainable materials as an important factor when choosing brands, which is prompting companies to alter their business models and embrace sustainability with increased gusto.

With this in mind, there’s no doubt that green stocks offer a viable long-term investment option, especially in fast-growing sectors such as electric vehicles and clean energy (which can help to tackle poor air quality in locations across the globe).

Such firms may also offer value through CFDs or forex trading initiatives, which allow investors to speculate on price movements in the pursuit of shorter-term gains.

Regardless, there’s no doubt that the stock market is turning increasingly green across the globe, with the efforts of the US and the Biden administration currently at the forefront of this trend. There is also little doubt that AI is helping drive this trend.