With a fresh £20,000 Stocks and Shares ISA contribution limit at my disposal this April, I turned to ChatGPT to help me build the perfect FTSE 100 portfolio.
I told the artificial intelligence (AI) chatbot I wanted to balance risk and reward with a mix of growth and income stocks across different sectors. While I’d never treat AI as a stock tipper, I was curious to hear its view.
Its first pick is a share I bought last year (but sometimes wish I hadn’t): spirits giant Diageo. ChatGPT plucked this from the consumer good sector, describing it as a global drinks powerhouse that “offers solid dividends and pricing power in an inflationary environment”.
It admits that the economic slowdown has hit revenues but didn’t mention the thing that really worries me – Gen Z isn’t so fixated on alcohol. That worries me.
A balanced spread from the FTSE 100
ChatGPT’s second pick is also one I own: insurer and asset manager Legal & General Group, from the financial services sector.
Its shares have idled lately but it does offer a brilliant 8.5% trailing dividend yield. ChatGPT highlights “strong long-term demand for financial planning services” while warning that it’s sensitive to market downturns. I love this one.
AI’s third pick is a share I’ve held in the past, and would like to hold again: Rio Tinto, from the mining and commodities sector. ChatGPT calls it a “reliable dividend payer”, neglecting to mention that it cut shareholder payouts in 2023. To be fair, it does have a 7% trailing yield today.
Rio Tinto shares have been hit by the struggling Chinese economy and volatile commodity prices. But worth considering at a low valuation of just eight times earnings.
The fourth pick is another stock I hold: Scottish Mortgage Investment Trust, from the technology and growth sector. This has been flying lately, although it’s taken a knock from Chinese AI upstart DeepSeek and Donald Trump’s trade wars. But I can’t knock its inclusion as a growth stock, albeit a volatile one.
I also asked ChatGPT to pick one stock it particularly likes. It chose one I don’t hold: pharmaceuticals giant AstraZeneca (LSE: AZN).
AstraZeneca is a top stock, but pricey
Now the UK’s biggest company, my robo-adviser called AstraZeneca the “cornerstone” of its ISA portfolio saying: “It combines resilience with innovation, making it an attractive option for both capital appreciation and stability”.
It said AstraZeneca continues to expand its research and development pipeline and with “blockbuster drugs such as Tagrisso and Imfinzi driving revenues, it’s well-positioned for sustained growth”.
Drug development’s an expensive and uncertain process and my chatty chum warns: “Regulatory approvals and clinical trial outcomes may influence its success”. Meanwhile, patent expirations pose a potential threat to revenue streams, requiring a steady flow of new medicines to offset losses, it adds.
I’m concerned that pharmaceutical companies are in the Trump administration’s firing line, while Astra’s shares aren’t cheap, trading at around 36 times earnings. That’s why I’ve resisted buying.
But I can’t argue with ChatGPT’s logic. And I won’t dispute its conclusion that “this portfolio offers a blend of stability, income, and growth”.
For investors considering how to build a Stocks and Shares ISA, this wouldn’t be a bad start. But they should research the risks as well as the rewards.
This post was originally published on Motley Fool
