Image source: Olaf Kraak via Shell plc
Over the past year, the Shell (LSE:SHEL) share price is flat. This means that if an investor bought £1k worth of stock, it would be worth exactly the same amount now. It’s unlikely they’d be particularly impressed, but with the focus now turning to where the stock could go in 2026, I asked my AI friend ChatGPT, I got an interesting reply.
To be clear, I don’t rely on ChatGPT to make any investment decisions for me. But given I have my own view on any particular company, I like to add in the mix of opinions from friends who also invest. As such, I see ChatGPT as a complementary voice that fits in. Just like any other opinion, I take it with a pinch of salt.
Regarding Shell, the chatbot noted that analysts currently have a 12-month average price target of around 3,190p-3,269p. Given the current share price of 2,718p, this indicates as return well over 15%.
In terms of reasoning, it noted that the stock trades at a lower price-to-earnings (P/E) ratio versus the market average. This is true, with a current P/E ratio of 9.73, far below the FTSE 100 average of 18. This could indicate the stock’s undervalued, supporting a move higher this year.
However, where ChatGPT let me down was with the overall consensus. It outlined that, given different scenarios, it would expect a year-end target range of 2,600p-3,600p. That’s an incredibly wide range. Even though it’s skewed towards a positive return for the stock, it isn’t terribly helpful in giving me a hand.
Analyst views are great, as are valuation tools like the P/E ratio. But I also like to add in more fundamental views about the outlook for any given company.
For Shell, a big factor is oil and gas prices. It’s been a volatile start to the year for oil prices, driven by heightened geopolitical tensions over Greenland. Yet, on the longer-term price chart, oil’s only a few dollars away from hitting its lowest level since Q1 2021.
Despite weak oil prices, the quarterly results from late October actually beat expectations. To me, this shows that even with current oil prices, it’s very resilient. If prices bounce back (due to geopolitics or other supply and demand factors) then it’s well-positioned to impress investors.
In terms of risks, I do believe that continued long-term pressure around emissions targets and strategic shifts to cleaner energy can create uncertainty for Shell. Even though this might not weigh on the stock today, I think it’s something that’s in the back of people’s minds.
Overall, I do agree with the consensus analyst view that the stock can do well and finish the year above 3,000p. However, the incredibly wide range offered by ChatGPT didn’t provide much help!
