ChatGPT thinks this is the best FTSE 100 value stock you can consider buying right now

Since its release, the artificial intelligence bot ChatGPT has attracted a lot of attention. But how useful is it in choosing funds? For a bit of fun, I asked it to point out the best stock value at FTSE 100 consider buying now.

The result was interesting, to say the least.

And the winner is…

ChatGPT stock option was no exception British American cigars (LSE: BATS), at least based on my searches. But why?

Another reason cited is that the company trades at a low price-to-earnings (P/E) ratio of 7. Given that the average UK stock trades at a P/E in the mid-teens, that doesn’t sound too controversial. to me.

The second reason was its strong cash flow, generated not only by sales of traditional cigarettes but also next-generation products such as vapes.

Third, ChatGPT drew attention to the strong pricing power of British American cigarettes and its global reach. It believed that these qualities should mean it was able to withstand challenging economic conditions. That makes sense given that its products are highly addictive.

Finally, the excellent dividend yield of 8% has been highlighted as attractive to those looking to generate income from their investments.

Combining all this, ChatGPT has given an analyst estimate of a fair value for the stock to be around £39 per share. If that happens, it will represent a 32% gain from where we are now.

Should I consider buying?

While this little experiment was interesting, I have a few reservations.

What worries the current owners is the fact that cigarette sales have been declining for a long time. To its credit, ChatGPT flagged this. However, it was not mentioned that British American tobacco could be a price trap at the time. So, that ‘fair price’ mentioned earlier should be taken with a truckload of salt.

Aside from setting a limit on how long I wanted an answer, I also found that ChatGPT was not focusing on other things that evidence has shown can be really important when it comes to stock returns, such as company debt and cash flow returns. It also did not say why it believed that British American Tobacco i better stock value than others in the FTSE 100 with similar qualities.

Personal discovery

Now, don’t get me wrong — I’m not dismissing AI for productivity. On the contrary. It will change all our lives in time. Some might argue that it already is.

But one needs to be aware of its current limitations when used in investing. In addition to the problems mentioned above, it has no idea of ​​my goals, time horizon, risk tolerance or whether I think it is ethical to invest in a business like this. Knowing these things is important when it comes to building a portfolio of stocks that I can stick with for the long term.

With this in mind, I consider this a tool that can help narrow down the list of stocks to those that may warrant further research. But put all my faith in it to help me get rich? Not a chance!

As for its top choice, let’s see what happens to British American cigarettes during 2025.