Step-by-Step: Analyzing Your First Stock with AI Prompts

Never used AI for stock analysis before? This beginner-friendly tutorial walks you through your first complete stock analysis using AI prompts. We'll analyze a real stock together.

What You'll Learn

By the end of this tutorial, you'll know how to:

• Use PromptPad's stock analysis tool
• Select the right investment agent
• Generate and run analysis prompts
• Interpret AI-generated stock analysis
• Make informed investment decisions

Prerequisites

• A web browser
• Free account on ChatGPT, Grok, or Gemini (any one works)
• 15 minutes of time

Step 1: Go to the Stock Analysis Tool

Open your browser and navigate to: https://promptpad.directory/stock

You'll see:

• A search box for entering stock tickers
• A grid of investment agent buttons
• An "Analyze" button

Step 2: Choose a Stock to Analyze

Let's analyze Microsoft (MSFT) – a well-known company that's easy to understand.

1. Click the search box
2. Type: MSFT
3. (You could also type "Microsoft" – both work)

Step 3: Select an Investment Agent

For your first analysis, we'll use Warren Buffett – the most beginner-friendly approach.

1. Look at the colored agent buttons below the search box
2. Find and click "Warren Buffett" (blue button in the Value section)
3. You'll see a checkmark indicating it's selected

Quick Guide to the Agents:

• 🔵 Blue (Value): Long-term, buy-and-hold approaches
• 🟢 Green (Growth): Focus on growing companies
• 🟣 Purple (Macro): Big-picture economic views
• 🟠 Orange (Technical): Chart-based analysis

Step 4: Click "Analyze"

With MSFT entered and Warren Buffett selected:

1. Click the "Analyze" button
2. A popup dialog will appear

Step 5: Choose Your AI Engine

In the popup, you'll see three tabs:

• Grok (default) – Fast, real-time data
• ChatGPT – Detailed analysis
• Gemini – Google's AI

For this tutorial, let's use ChatGPT if you have an account, or Grok if you have X Premium.

1. Click the ChatGPT tab
2. You'll see the generated prompt in a text box

Step 6: Review the Prompt

Take a moment to read the prompt. It instructs the AI to:

• Analyze MSFT using Warren Buffett's methodology
• Evaluate the economic moat
• Assess management quality
• Check financial health
• Estimate intrinsic value
• Identify risks

This is the "magic" – a carefully crafted prompt that applies Buffett's principles to Microsoft.

Step 7: Launch the Analysis

You have two options:

Option A: Copy and Paste

1. Click "Copy Prompt"
2. Open ChatGPT in a new tab
3. Paste the prompt and hit Enter

Option B: Launch Directly

1. Click "Launch ChatGPT"
2. A new window opens with ChatGPT
3. The prompt is automatically submitted

Let's use Option B – click "Launch ChatGPT"

Step 8: Read the Analysis

ChatGPT will generate a comprehensive analysis. Here's what to look for:

Section 1: Circle of Competence

• Is the business understandable?
• For MSFT: Software, cloud computing, productivity tools ✅

Section 2: Economic Moat

• What protects the business from competition?
• For MSFT: Enterprise lock-in, Azure cloud scale, Office dominance ✅

Section 3: Management Quality

• Is leadership shareholder-friendly?
• For MSFT: Satya Nadella transformed the company, strong capital allocation ✅

Section 4: Financial Health

• Is the company financially strong?
• For MSFT: High margins, massive cash flow, manageable debt ✅

Section 5: Valuation

• Is it fairly priced?
• For MSFT: The AI will compare current P/E to historical averages

Section 6: Conclusion

• Buy, hold, or pass?
• The AI provides a recommendation with reasoning

Step 9: Ask Follow-Up Questions

The analysis raised something you want to explore? Ask!

Example follow-ups:

• "What are the biggest risks to Microsoft's Azure cloud business?"
• "How does MSFT's valuation compare to GOOGL and AMZN?"
• "Explain Microsoft's moat in gaming with the Activision acquisition"

Step 10: Try Another Agent

Now let's see a different perspective:

1. Go back to promptpad.directory/stock
2. With MSFT still entered, select "Peter Lynch" (green button)
3. Click Analyze again
4. Launch in your AI of choice

Peter Lynch focuses on PEG ratio (P/E divided by growth rate) and categorizing stocks. Compare this analysis to Buffett's – you'll get insights both approaches surface!

Understanding the Results

Green Flags (Positive Signs)

• ✅ Strong, widening economic moat
• ✅ High return on equity (ROE > 15%)
• ✅ Consistent free cash flow growth
• ✅ Insider buying
• ✅ Trading below intrinsic value

Red Flags (Warning Signs)

• ❌ Deteriorating margins
• ❌ Excessive debt (D/E > 2x)
• ❌ Unclear competitive advantage
• ❌ Management selling heavily
• ❌ Trading far above intrinsic value

Common Beginner Mistakes

Mistake 1: Taking AI Output as Gospel

Problem: Blind trust in AI recommendations Fix: Always verify key financial data with official sources

Mistake 2: Only Using One Agent

Problem: Getting a narrow perspective Fix: Run the same stock through 2-3 different agents

Mistake 3: Ignoring Valuation

Problem: Buying great companies at any price Fix: Always check if there's a margin of safety

Mistake 4: Analysis Paralysis

Problem: Endlessly analyzing, never deciding Fix: Set decision criteria before analyzing

Your Homework: Analyze Another Stock

Practice makes perfect. Try analyzing one of these:

Beginner-Friendly Stocks:

• AAPL (Apple) – Consumer tech
• KO (Coca-Cola) – Beverages
• JNJ (Johnson & Johnson) – Healthcare
• PG (Procter & Gamble) – Consumer goods

For Each Stock:

1. Run Warren Buffett analysis
2. Run Peter Lynch analysis
3. Compare the conclusions
4. Note what you learned

Next Steps

Now that you've completed your first AI stock analysis:

1. Learn More Agents: Read 19 Value Investing Agents Guide
2. Deep Dive Buffett: See Warren Buffett AI Investment Prompts
3. Compare AIs: Check Grok vs ChatGPT vs Gemini

Important Disclaimer

AI-powered stock analysis is a tool, not financial advice. Always:

• Do your own research
• Verify AI-generated facts
• Consider your personal financial situation
• Consult a financial advisor for significant decisions

Happy investing! 📈

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Related Articles:

• Complete Guide to AI Stock Analysis
• Warren Buffett AI Investment Prompts
• 19 Value Investing Agents Guide