AI and process

Where AI helps investment research, and where it quietly hurts

The useful question is not whether models can write an investment memo. It is which parts of research are bottlenecked by reading speed, and which are bottlenecked by judgement.

Published 24 August 2026 · 7 min read

Article

Strong: extraction, normalisation, contradiction-finding

Pulling structured claims out of a data room, normalising three years of inconsistently formatted financials, and flagging where the deck disagrees with the contracts are tasks with objective answers and immediate verification. This is where the hours go and where models return them.

  • Claim extraction with a page-level citation for each item
  • Cross-document contradiction detection
  • Competitor and pricing sweeps from public sources
  • First-draft diligence questions derived from gaps in the material

Weak: anything requiring an unavailable fact

Asked for a market size that no public source establishes, a model will produce a plausible number rather than refuse. The failure is not that it guessed; it is that the guess arrives with the same tone as a verified figure. Every downstream reader then inherits false precision.

The control is structural: require a source URL or document reference for any figure labelled verified, and render everything else as an estimate with its basis stated. A system that cannot say "unknown" is not usable for diligence.

Controls that make model output auditable

RiskControlObservable signal
Fabricated figuresSource required for verified statusShare of claims with live citations
Silent driftRe-run scoring on a fixed test dealScore variance between runs
Over-confidenceConfidence band tied to evidence coverageConfidence falls as coverage falls
Unexplainable scoresStored data → evidence → reasoning chainEvery score opens to its inputs

The division of labour that works

Let the model compress the material and surface what disagrees. Let the analyst decide what it means. The moment a system starts issuing verdicts whose inputs cannot be inspected, it has stopped being research infrastructure and started being an unaccountable opinion.

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