Menu
  • Publish Your Research/Review Articles in our High Quality Journal for just USD $99*+Taxes( *T&C Apply)

    Offer Ends On

Research Article

AI and Social Media in Shaping Investment Behavior

Ajaz Ahmad Bhat*

Corresponding Author: Ajaz Ahmad Bhat, Islamic University of Science and Technology Awantipora, Pulwama, Pin-192122, Jammu and Kashmir, India.

Received: April 20, 2026 ;    Revised: April 26, 2026 ;    Accepted: April 28, 2026 ;   Available Online: April 30, 2026

Citation:

Copyrights:

Share Your Publication :

Views & Citations

7

Likes & Shares

0


Global Views

  • Abstract
  • Full Text
  • Images
  • Tables
  • References
  • PDF
  • Supplementary Files

The use of Artificial Intelligence (AI) and the growing impact of social media platforms such as Twitter, Facebook, and Instagram have significantly changed how people invest in financial markets. AI tools, like sentiment analysis and machine learning, help investors make better decisions by analyzing real-time opinions and emotions shared on social media. Platforms like Twitter, Reddit, Facebook, and Instagram often drive market trends by influencing public sentiment, which can lead to emotional or irrational investment decisions. This study examines how AI can be utilized to analyze social media content, to understand its impact on shaping investment behavior. The paper focuses on how AI can help investors make more informed decisions, reduce emotional biases, and manage risks effectively. By examining how sentiment from social media influences short-term market fluctuations, the research investigates how AI can improve decision-making and counter the spread of rumors or misleading information. Ultimately, the study aims to demonstrate how AI tools can support investors in making more rational, data-driven choices while mitigating the impact of irrational behaviors often amplified by social media platforms such impact of irrational behaviors often amplified by social media platforms such as Twitter, Facebook, and Instagram.

Keywords: Artificial Intelligence, Social Media, Investment Behavior, Sentiment Analysis, Machine Learning, Social Media Behavioral Finance, Risk Management, Social Media Platforms (Twitter, Facebook, Instagram).

  1. Ahmed W. M. A., & Skully, M. (2019). Sentiment analysis in financial markets. Journal of Behavioral and Experimental Finance, 23, 100247. https://doi.org/10.1016/j.jbef.2019.100247
  2. Antweiler W, & Frank, M. Z. (2004). Is all that talk just noise? The information content of Internet stock message boards. The Journal of Finance, 59(3), 1259–1294.
  3. Arora P & Kumar, A. (2021). Sentiment-based forecasting models in financial trading. International Journal of Financial Studies, 9(2), 33.
  4. Baker M & Wurgler, J. (2006). Investor sentiment and the cross-section of stock returns. The Journal of Finance, 61(4), 1645–1680.
  5. Banerjee A. V. (1992). A simple model of herd behavior. The Quarterly Journal of Economics, 107(3), 797–817.
  6. Bar-Haim R., Dinur, E., Feldman, R., &Fresko, M. (2011). Identifying and following expert investors in stock microblogs. EMNLP, 1310–1319.
  7. Barberis N., & Thaler, R. (2003). A survey of behavioral finance. Handbook of the Economics of Finance, 1, 1053–1128.
  8. Bhat A. A. (2018). Behavior of retail investors towards financial investments (with special reference to Bhopal) towards various investment alternatives. Journal of Business & Financial Affairs, 7(2), 336. https://doi.org/10.4172/2167-0234.1000336
  9. Bollen J., Mao, H., & Zeng, X. (2011). Twitter mood predicts the stock market. Journal of Computational Science, 2(1), 1–8. https://doi.org/10.1016/j.jocs.2010.12.007
  10. Boudoukh J., Feldman, R., Kogan, S., & Richardson, M. (2013). Which news moves stock prices? A textual analysis. NBER Working Paper No. 18725.
  11. Brown, G. W., & Cliff, M. T. (2005). Investor sentiment and asset valuation. The Journal of Business, 78(2), 405–440.
  12. Chen, H., De, P., Hu, Y. J., & Hwang, B. H. (2014). Wisdom of crowds: The value of stock opinions transmitted through social media. The Review of Financial Studies, 27(5), 1367–1403.
  13. Das, S. R., & Chen, M. Y. (2007). Yahoo! for Amazon: Sentiment extraction from small talk on the web. Management Science, 53(9), 1375–1388.
  14. de Fortuny, E. J., De Smedt, T., Martens, D., &Daelemans, W. (2012). Media coverage in times of political crisis: A text mining approach. Expert Systems with Applications, 39(14), 11616–11625.
  15. Deng, Y., & Lin, J. (2022). AI and human decision-making in investment: Complementary or contradictory? AI & Society, 37, 111–128.
  16. Dimpfl, T., & Jank, S. (2016). Can Internet search queries help to predict stock market volatility? European Financial Management, 22(2), 171–192.
  17. Du, B., & Tan, K. L. (2020). Leveraging deep learning for investor sentiment prediction from financial news. Information Processing & Management, 57(4), 102227.
  18. Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417.
  19. Fang, L., & Peress, J. (2009). Media coverage and the cross-section of stock returns. The Journal of Finance, 64(5), 2023–2052.
  20. Gilbert, E., & Karahalios, K. (2010). Widespread worry and the stock market. ICWSM, 59–65.
  21. Goel, S., Hofman, J. M., Lahaie, S., Pennock, D. M., & Watts, D. J. (2010). Predicting consumer behavior with Web search. PNAS, 107(41), 17486–17490.
  22. Hutto, C. J., & Gilbert, E. (2014). VADER: A parsimonious rule-based model for sentiment analysis of social media text. ICWSM, 216–225.
  23. Jain, N., & Rajput, A. (2021). Understanding financial decision-making in a digital age. Journal of Digital Finance, 4(3), 210–228.
  24. Jain, S., & Jain, R. (2019). Role of AI in shaping investor psychology. Journal of Behavioral Finance, 20(4), 309–320.
  25. Jiao, W., & Riedl, R. (2018). Social media and financial markets: A survey of the literature. Journal of Information Technology Theory and Application, 19(4), 5–22.
  26. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.
  27. Kaminski, J. (2014). Sentiment analysis in financial texts. In H. Börner (Ed.), Text Mining and Visualization (pp. 23–40). Springer.
  28. Kapoor, R., & Mehta, S. (2022). Influence of social media influencers on investment choices. Journal of Media Economics, 35(1), 56–71.
  29. Kearney, C., & Liu, S. (2014). Textual sentiment in finance: A survey of methods and models. International Review of Financial Analysis, 33, 171–185.
  30. Khan, M. A., & Nawaz, M. R. (2023). Social media analytics and financial forecasting. Decision Analytics Journal, 5, 100087.
  31. Li, F. (2010). The information content of forward-looking statements in corporate filings—A naïve Bayesian machine learning approach. Journal of Accounting Research, 48(5), 1049–1102.
  32. Li, X Xie, H., Chen, L., Wang, J., & Deng, X. (2014). News impact on stock price return via sentiment analysis. Knowledge-Based Systems, 69, 14–23.
  33. Luo X., Zhang, J., & Duan, W. (2013). Social media and firm equity value. Information Systems Research, 24(1), 146–163.
  34. Mao H., Counts, S., & Bollen, J. (2015). Predicting financial markets: Comparing survey, news, Twitter and search engine data. arXiv. https://arxiv.org/abs/1112.1051
  35. McLean R. D., & Pontiff, J. (2016). Does academic research destroy stock return predictability? The Journal of Finance, 71(1), 5–32.
  36. Mittal A., & Goel, A. (2012). Stock prediction using Twitter sentiment analysis. Stanford CS229 Project Report.
  37. Nguyen, T. T., Shirai, K., &Velcin, J. (2015). Sentiment analysis on social media for stock movement prediction. Expert Systems with Applications, 42(24), 9603–9611.
  38. Nofer M., & Hinz, O. (2014). Using Twitter to predict the stock market: Where is the mood information useful? Business & Information Systems Engineering, 56, 229–239.
  39. Oliveira N., Cortez, P., & Areal, N. (2017). The impact of microblogging data for stock market prediction. Expert Systems with Applications, 73, 125–144.
  40. Rajeswari K., & Jothimani, D. (2021). Role of social media in stock market: A review of existing literature. Indian Journal of Finance, 15(1), 32–48.
  41. Ransbotham S., Kiron, D., Gerbert, P., & Reeves, M. (2017). Reshaping business with artificial intelligence: Closing the gap between ambition and action. MIT Sloan Management Review.
  42. Ranco G., Aleksovski, D., Caldarelli, G., Grčar, M., & Mozetič, I. (2015). The effects of Twitter sentiment on stock price returns. PLOS ONE, 10(9), e0138441.
  43. Rossi A. G., & De Silva, T. A. (2021). Artificial intelligence in investment management: Insights and future research directions. Finance Research Letters, 40, 101770.
  44. Rydén P., Ringberg, T., & Wilke, R. (2015). How managers’ shared mental models of business–customer interactions create different sensemaking of social media. Journal of Interactive Marketing, 31, 1–16.
  45. Schumaker R. P., & Chen, H. (2009). Textual analysis of stock market prediction using breaking financial news: The AZFin text system. ACM Transactions on Information Systems, 27(2), 1–19.
  46. Sharma D., & Sehgal, S. (2018). Investor overconfidence and market volatility. Journal of Economic Behavior& Organization, 150, 592–611.
  47. Srivastava S. (2022). AI-powered financial sentiment analysis: Tools and trends. Fintech Frontier, 6(3), 88–101.
  48. Statman M. (2000). Socially responsible mutual funds. Financial Analysts Journal, 56(3), 30–39.
  49. Tetlock P. C. (2007). Giving content to investor sentiment: The role of media in the stock market. The Journal of Finance, 62(3), 1139–1168.
  50. Tripath N., & Bhatia, P. (2022). AI in investor sentiment analysis: Challenges and applications. AI & Society, 37(3), 567–582.
  51. Tumarkin R., & Whitelaw, R. F. (2001). News or noise? Internet postings and stock prices. Financial Analysts Journal, 57(3), 41–51.
  52. Wong F. M. F., & Liu, M. (2014). Exploring stock market prediction using Twitter sentiment analysis. PAKDD, 125–136.
  53. Zhang W., Skiena, S., &Lakonishok, J. (2016). Improving stock market prediction using Twitter sentiment. SSRN. https://ssrn.com/abstract=2254192
  54. Zhang X., Fuehres, H., & Gloor, P. A. (2011). Predicting stock market indicators through Twitter. Procedia - Social and Behavioral Sciences, 26, 55–62.

 

    No Files Found