AI Applications in Alternative Data
Earnest Analytics’ Head of Marketing, Michael Maloof, sat down with AlphaSense’s Nick Mazing to discuss AI applications in alternative data. Their conversation also highlighted the rollout of Earnest AI, our new predictive AI application that can be layered on top of existing Earnest datasets.
Michael Maloof on the evolution of machine-learning and AI usage at Earnest: “Of all the tech buzzwords we’ve lived through in the last decade, I think AI has the one with the most staying power, given its potential to scale existing processes and unlock the value hidden within our massive datasets. Earnest has been using some version of machine learning, the basis for AI, for years to ensure the quality of our data. There would simply not have been a scalable way for analysts to comb through the billions of rows that we get and create reliable signals. Machine learning helped us quiet the noise, if you will. Then in August we launched Earnest AI, which built on our machine learning foundation. Earnest AI represents the next step in using generative artificial intelligence to actually derive signals from the data.”
Michael Maloof on Earnest AI’s accuracy: “Earnest AI’s reported metrics predictions were trained on years of examples on hundreds of tickers. So we were fairly confident in its ability to generate accurate results at launch. But since it went live in August of 2023, we have even been impressed internally by its accuracy. For example, Wall Street bet that a large national wholesaler would report positive sales growth in the second quarter of 2023. Not only did Earnest AI correctly predict a contradictory negative year on year sales print, but we came within one one-hundredths of the actual result. If an investor had been using the Earnest AI read, they would have seen the subsequent negative stock reaction coming…the basic reason is that Earnest AI is able to build that data mosaic for these stocks faster and with more accuracy than Wall Street.”
Michael Maloof on what’s down the road for AI and alt data: “In the future, you can expect Earnest AI to power predictive metrics across datasets to create composite earnings. This tool will also eventually underpin other metrics for non-public names. If you take a step back, it makes sense for the whole data industry to embrace AI as part of our process. Data platforms like Earnest, we’re onboarding billions of rows of data a day; there’s simply no way we can keep up as an industry using analysts alone to derive signals from exponentially growing datasets.”
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