AI Chatbots for Stock Tips: Nithin Kamath’s Warning
Nithin Kamath urged investors to use AI chatbots for stock tips, but the tools cannot identify who is behind a pump-and-dump scheme.
The warning behind the AI chatbot advice
Zerodha founder and CEO Nithin Kamath has asked retail investors to use AI chatbots for stock tips received through messaging apps. On October 20, he wrote on X and his Substack blog that “so the next time you get a message promising easy money, just ask Claude or ChatGPT whether it’s a good idea. It could save you a lot of money.”
The recommendation followed the Enforcement Directorate’s October 19 statement that it had frozen trading accounts worth about Rs 200 crore in an alleged WhatsApp-driven “pump and dump” scheme.
Kamath’s recommendation
Kamath said investors were already seeing more pump-and-dump activity through WhatsApp groups and influencers promoting IPOs and stocks. “This won’t end well,” he wrote.
What AI chatbots can and cannot check
The ED said WhatsApp communities such as “Multibagger Stocks” sent daily buy tips to retail investors from the end of December 2025 to February 2026. The agency said it appeared that R M Drip and Sprinklers Systems Ltd stock was promoted through WhatsApp groups, and that preferential allottees took advantage of the increased buying interest and dumped part of their shareholding to a large number of investors.
An AI chatbot with web searching enabled may help identify warning signs such as urgency and promises of easy returns. It cannot tell a user who forwarded a message or who is selling while prices rise. For checking whether payment requests come from registered intermediaries, SEBI Check may be used.
What SEBI’s rules say about AI
SEBI’s rules make regulated entities responsible for the AI tools and techniques they rely upon or deal with, as well as investor data and legal compliance. OpenAI and Anthropic, the companies behind ChatGPT and Claude, are not SEBI-registered.
The ED’s case is focused on the people behind the funding of the share allotments and the running of the WhatsApp groups. A chatbot cannot tell a user who forwarded a message or who is selling while prices rise. The ED said further investigation was under progress.
