AI Won’t Replace Great Investors. It Will Separate Them
From my desk Sean Emory at Avory & Co.
So, this may shock people. Given that I speak a lot about how AI and generative AI are going to drive meaningful change in how we all process workflows, however I actually don’t think AI is going to replace great asset managers.
What I do think is that it will create a serious separation between firms that use it well and firms that don’t.
Here’s the reality. AI is only as good as the data you feed it. If every asset manager is training their models on the same public data — earnings reports, macro trends, analyst forecasts — you’re going to get the same answers. That’s not an edge.
The real edge? Proprietary insights + AI as a copilot. And right now, most investors aren’t even close to using AI this way.
AI in Investing: The Hype vs. The Reality
I don’t think people realize that 70-80% of market trading is done by algorithms. (Whoa.)
This makes intuitive sense. When a company releases an earnings report, millions of trades happen within milliseconds, way before any human can react to the actual fundamental takeaways. That’s all AI and quant-driven trading.
But the reality is. Most asset managers aren’t actually using AI to make investment decisions.
High-frequency traders and quant funds? Sure. But fundamental investors? Not really.
McKinsey estimates AI could add $200B-$340B in annual value to banking and finance. Yet we’re still in the early innings of true AI-driven investing. Most firms are still in Phase 1 – automation, not Phase 2 – decision-making.
What Separates Top Investors? The Right Data
If AI models are all looking at the same public market data, they’ll converge on the same ideas. That’s why the best investors will differentiate not by just having AI, but by feeding AI the right data.
So what does that mean? It means AI isn’t going to tell you what to buy. It’s going to tell you how to think. And the firms that win will be the ones feeding AI proprietary information that others don’t have.
Here’s where real differentiation happens at least us at Avory:
Here are some ways we get data advantage.
2. Independent discussions with ex-employees and customers – This is the stuff that never makes it into earnings transcripts but can completely change your investment conviction.
3. Alternative data – credit card transactions, app downloads, LinkedIn scraping – Not just "who is hiring" but how aggressively, what job types, and how it compares to competitors.
Right now, I’d argue 80-90% of investors aren’t using any of this and they likely won't as it is not easy to find, expensive to source, or they cannot integrate into their process.
They’re sticking to traditional datasets.
What Happens When AI Models All Look the Same?
Here’s the problem. If a big portion of asset managers start using the same AI models, you could actually see faster crowding in trades.
Think about it. If 50 funds are using similar AI-driven market signal models, they’re all getting pushed into the same trades at the same time.
That means:
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2. Meme-like volatility – Herd investing could speed up, with AI-driven models reinforcing each other’s moves.
This already happens. Just look at how momentum-based strategies react to earnings.
It’s why a stock can rip 15% up in after-hours, then be down 5% the next morning. The bid/ask spreads on liquidity-sensitive stocks are becoming increasingly AI-driven.
So the firms that rely on generic AI models? They’ll get caught up in this game.
The firms that have AI models powered by their own proprietary data? They’ll actually have an edge.
AI as a Copilot, Not the Pilot
So, where does this all land?
AI is not going to replace discretionary investment decisions. At least not anytime soon.
The best firms are going to use AI as a copilot. An intelligence layer that can process enormous amounts of data, surface patterns, and optimize workflow efficiency.
But it won’t replace deep fundamental diligence.
It’s not going to take a small-cap CEO meeting, read their body language, and know if they’re lying. (Although, if someone builds that… I’d love to see it.)
The best asset managers will:
1?? Use AI to uncover opportunities and optimize workflows.
2?? Feed it differentiated, proprietary data that others don’t have.
3?? Rely on human intuition, experience, and conviction for final decision-making.
That’s the game.
My Final Thought: AI Won’t Replace Asset Managers. It Will Separate Them.
The future of investing isn’t man vs. machine.
It’s man + machine vs. everyone else.
The firms that leverage AI with unique insights will outperform.
The firms that don’t? They’ll just be trading in the same crowded playground.
Where do you see AI providing the biggest edge in investing? Drop a comment.
About Avory & Co.
Investing where the world is headed. Avory is a high-conviction equity asset manager focused on Secular Growth and Transformation Stories. Allowing data to tell our stories. Avory invests in valuable companies led by exceptional teams. Avory & Co. is located in Miami, Florida offering SMA's for institutions and high-net-worth individuals.
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Disclosure: Not a recommendation to invest in any companies mentioned. Investment involves risk.