Hedge funds turn to AI startups to replace human analysts

For decades, hedge funds prioritized human intuition as their primary competitive edge. While firms like Citadel and Bridgewater long utilized machine learning for legal review or tech support, recent advancements in AI agents have shifted the focus toward core investment functions. Citadel founder Ken Griffin recently admitted to being unsettled by the speed of new AI tools, noting that tasks requiring a Ph.D. and weeks of labor can now be completed in mere hours.

This shift has spawned a wave of specialized startups led by industry alumni. Ian McInnis, a former Bridgewater analyst, launched WithAI to help firms process massive datasets, while Macro Technologies, co-founded by former Citadel Securities researcher Jaime Villa, aims to automate macro analysis entirely. Similarly, Serona Data is using AI to extract investment signals from healthcare data—a task previously requiring human nuance. The economic incentive is clear: founders like Aristides Capital’s Claire Brown argue that AI models like Claude now perform at the level of a $100,000-a-year junior analyst for a negligible fraction of the cost.

For smaller funds, this technology offers a path to scale without the prohibitive overhead of a massive talent pool. Stephen Wu of Carthage Capital hopes to expand his firm’s reach from twenty stocks to hundreds by codifying his own decision-making process into AI agents. As firms like Bridgewater begin partnering with labs to develop models capable of expert-level judgment, the industry is bracing for a fundamental change in how investment decisions are made.