Image source: Getty Images <\/p>\n
Stock market crashes are notoriously difficult to predict. So I tried asking the latest version of ChatGPT whether I need to worry about a bubble in artificial intelligence (AI) shares.<\/p>\n
OpenAI chief executive Sam Altman says that GPT-5 is supposed to be like talking to a PhD-level expert. But the response I got resembled something I might expect from first-year undergraduates.<\/p>\n
All that ChatGPT gave me is a list of potential AI risks, including weak earnings and tighter regulation. But in terms of a crash, all it said is that the threat\u2019s \u201cmeaningful\u201d \u2013 whatever that means.<\/p>\n
That wasn\u2019t much help. But it offered to help me assess the probability of different scenarios \u2014\u00a0 including a mild correction, a moderate decline, and a major crash \u2013 which sounded better.<\/p>\n
This however, turned out to be some statistics about the past frequency of each of these. And it concluded the likeliest outcome is a 10%-20% drop, because that\u2019s happened most before.<\/p>\n
That\u2019s information I can get myself fairly easily. But maybe a PhD isn\u2019t what you need for figuring out when a crash is coming and the best way to prepare.<\/p>\n
Given this, I\u2019m sticking to my usual approach for being ready for a stock market crash. Part of this involves having an idea of which shares I want to buy if prices go down sharply.<\/p>\n
What I look for is a business that\u2019s going to emerge from a downturn in a stronger position than it was in before. And that means a company with a strong competitive advantage.<\/p>\n
When things get tough in an industry, it\u2019s often the case that the weakest firms get hit the hardest. So stronger operators find themselves in an even better position when things recover. That means looking for businesses with big competitive advantages. And there\u2019s one in particular from the UK that\u2019s at the top of my list.<\/p>\n
Compass Group (LSE:CPG) is a FTSE 100 contract caterer. It\u2019s not an obvious AI casualty, but if automation drives staff reduction, the firm could face lower demand from workplaces.<\/p>\n
The company however, has an incredibly strong competitive position. It\u2019s the biggest operator by far and its scale gives it an advantage when it comes to negotiating prices with suppliers.<\/p>\n
What impresses me most is that the firm\u2019s been strengthening its position in an unusual way. It\u2019s been monetising its position by letting competitors use its platform in exchange for a fee.<\/p>\n
This generates extra cash while disincentivising rivals from trying to build a competing operation. I think this makes it a brilliant move in terms of securing its long-term position.<\/p>\n
ChatGPT wasn\u2019t able to tell me much about whether the next stock market crash is imminent. That might be because figuring this out is just too hard even for PhD-level thinking.<\/p>\n
Given this, my plan is to make sure I\u2019m ready with a list of stocks I want to buy whenever the next big drop in share prices comes. And Compass Group\u2019s one of these.<\/p>\n
Right now, the stock\u2019s about 10% above my target price. But I expect it to be more resilient than its peers in a big downturn and that makes it an ideal candidate to consider in a crash.<\/p>\n
The post I asked ChatGPT if an AI bubble\u2019s about to cause a stock market crash and it said\u2026<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Stock market crashes are notoriously difficult to predict. So I tried asking the latest…\n","protected":false},"author":2,"featured_media":267184,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[733,84,74946,59,10108,4767,16344,56,54,55],"class_list":{"0":"post-267183","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-artificial-intelligence","9":"tag-business","10":"tag-competitive-advantage","11":"tag-gb","12":"tag-sam-altman","13":"tag-stock-market","14":"tag-stock-market-crash","15":"tag-uk","16":"tag-united-kingdom","17":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/267183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=267183"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/267183\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/267184"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=267183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=267183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=267183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}