I’m eager so as to add a couple of FTSE 250 shares to my portfolio of principally FTSE 100 shares, however I’m questioning the place to start out. So I made a decision to ask ChatGPT.

Synthetic intelligence (AI) goes to be operating our lives quickly sufficient, I’m advised. So why not let it run my portfolio at the moment?

Truly, there are causes. ChatGPT’s first decide was Warhammer-maker Video games Workshop. It exited the FTSE 250 on 5 December, and now resides within the FTSE 100. Oh effectively. Even robots aren’t excellent.

So I requested ChatGPT to provide it one other shot. I will need to have aggravated my AI chum as a result of it plumped for on-line vogue retailer ASOS (LSE: ASC). Now that was a courageous name!

By courageous I imply mad. ASOS? Actually? Of all of the shares on the FTSE 250, I didn’t anticipate that.

If AI does personal the longer term, it’s going to be risky.

ASOS is a high-risk play

ASOS might be the last word falling knife. On-line vogue retail hope turned vogue sufferer. And AI would purchase it in a heartbeat? Simply be grateful it doesn’t have a coronary heart. But.

The ASOS share price is down 88% during the last 5 years. Trading at 385p, it’s again down to 2009 ranges. 

It is a excellent storm of a inventory, hammered by all the pieces from the cost-of-living disaster to robust competitors from Chinese language-owned quick vogue rival Shein, which pressured it to dump piles of unsold inventory at a reduction.

In full-year 2023, losses hit £296.7m. That elevated to £379.3m in 2024, whereas group revenues slumped 16% to £2.9bn. CEO José Antonio Ramos Calamonte nonetheless claimed to have hit his key priorities by decreasing inventories and “generating positive adjusted EBITDA and free cash flow”.

Gross sales have been up too and ASOS nonetheless boasts 20m prospects, he added. However neglect Calamonte. He’s solely the boss. What does AI suppose?

ChatGPT admires the group’s “strong online presence” whereas praising its “robust e-commerce platform that appeals to a global customer base”. That line may have been written by a pc. Oh, it was.

As was the bit about how ASOS’s worldwide growth plans may “diversify revenue streams beyond the UK”. The place is it nicking these things from? And why didn’t it point out the mothballed £110m fulfilment centre in Lichfield?

The worst could also be over

In its defence, ASOS shares have stopped falling. In reality, they’re really up 2.62% within the final yr. Is that this the long-awaited restoration?

The shares received a small enhance on 2 February when two credit score insurers reinstated cowl for its clothes suppliers, withdrawn in 2023 as a result of considerations over income. This implies ASOS has larger monetary stability.

ASOS has additionally made some progress in addressing its stock challenges. It’s halved unsold inventory and transitioned to a extra agile ‘Test and React’ mannequin. This could assist it reply swiftly to new tendencies, driving full-price gross sales and boosting margins.

Promoting its 75% stake within the Topshop and Topman manufacturers for £135m will enhance liquidity and permit administration to give attention to the core enterprise. So possibly ChatGPT hasn’t gone haywire.

After its horrible run, ASOS is again on my radar. However with shoppers nonetheless strapped for money and inflation sticky, there’s no means I’m going to purchase it at the moment.

I’m mad sufficient to request inventory ideas from a pc. Not mad sufficient to behave on them.