IBM made headlines for beating Garry Kasparov at chess in 1997, and Ken Jennings at Jeopardy in 2011. Now, HSBC is turning IBM’s Watson into a stock picker. 

“Some of [our clients] might not be overly familiar with artificial intelligence or machine learning technology. It might be the first time they have encountered it, and we felt strongly that IBM Watson was a household name,” said Dave Odenath, senior vice president of HSBC Global Banking and Markets. “It’s something that has been in the media and has had a bunch of landmark achievements.” 

HSBC, the London-based bank with $2.9 trillion in assets, this week launched AiPEX, an AI-powered equity investing tool. The technology picks stocks that it sees as poised for growth, and HSBC’s institutional clients can use those insights to develop a portfolio.  

AiPEX evaluates the largest 1,000 publicly traded companies in the U.S. and picks the best 250 stocks. The technology rebalances its portfolio at the end of every month. Odenath said AiPEX pulls from financials, market data, sentiment information and macroeconomic signals when making evaluations. According to a statement from HSBC, “data points could include a company announcement, a tweet, a satellite image of a store parking lot, or even the tone of language a CEO uses during an earnings presentation.” 

HSBC partnered with EquBot, a San Francisco-based AI company that was incubated out of IBM Watson with the goal of turning Watson into a stock picker. The company was co-founded in 2017 by Chida Khatua, the former director of engineering at Intel. According to Odenath, EquBot already manages “several hundred million” dollars.  

See also: HSBC launches digital personal loans using Amount’s tech 

In mid-February, AiPEX anticipated the COVID-19 impact and used insights from the SARS outbreak of 2004 to guide investment decisions, according to HSBC. The technology avoided entertainment stocks like Ceasars Entertainment and Best Buy, instead picking the biotech company Moderna, which is developing a COVID-19 vaccine, and Amazon. 

Odenath said it’s too early to say whether HSBC will keep AiPEX’s technology in-house or spin it out. “We have a great relationship with EquBot and IBM,” he said. “We’re certainly exploring new ways to try and apply this technology to other areas of the investable universe.”