Will AI Make Markets Less Efficient?

Artificial intelligence and machine learning are fundamentally transforming quantitative investment strategies by enabling deeper, more nuanced analysis of global market data. Osman Ali, Global Co-Head of Quantitative Investment Strategies at Goldman Sachs, explains that while traditional models previously relied on rudimentary sentiment classification, modern large language models allow for precise extraction of management sentiment and risk assessments across diverse languages. This technological evolution shifts market drivers toward technicals and sentiment, often overshadowing traditional business fundamentals. Although the widespread democratization of these tools risks creating herd behavior and crowding, it simultaneously generates new alpha opportunities for investors who combine advanced data-driven modeling with deep contextual experience. Ultimately, the ability to identify predictable patterns amidst increasing market complexity—rather than just the volume of data—remains the primary source of an informational edge in today’s financial landscape.