Artificial Intelligence in Equity and Crypto Markets: Progress, Profitability Evidence, and the Limits of Automated Investing

Abstract: AI now supports investment workflows from data and prediction through research, portfolios, execution, and tool use. Technical capability, however, is not evidence of investment profitability. This critical state-of-the-art review examines public research available through 31 August 2026 on listed equities, exchange-traded funds, centralized crypto spot, perpetual futures, and on-chain markets. We organize evidence with an alpha-translation chain: point-in-time information must yield a stable signal, feasible positions, executable orders, and risk-adjusted returns after costs. Across machine learning, time-series foundation models, financial LLMs, reinforcement learning, and agents, the examined record shows real but mainly upstream progress in prediction, text processing, portfolio design, and workflow integration. Evidence is thinner for durable net performance. Temporal contamination, repeated selection, survivorship, weak benchmarks, implementation costs, venue mechanics, and capacity can break translation to net alpha. Strong historical results coexist with predictor decay, corrected look-ahead failures, mixed prospective evidence, and few audited live-capital records. Crypto adds informative state but requires separate treatment of spot, perpetual, and decentralized cash flows and execution. Within the public evidence examined here, no general AI architecture is shown to deliver persistent, cross-regime, capacity-aware net alpha. More credible claims require point-in-time data and models, decision-aligned objectives, joint portfolio--execution evaluation, controlled adaptation, prospective tests, and authority-matched governance. These conditions can improve evidence and implementation; they do not guarantee profit.