Factor Augmented Supervised Learning with Text Embeddings

Abstract: LLMs generate text embeddings from text data, producing vector representations that capture the semantic meaning and contextual relationships of words. However, the high dimensionality of these embeddings often impedes efficiency and drives up computational cost in downstream tasks. To address this, we propose AutoEncoder-Augmented Learning with Text (AEALT), a supervised, factor-augmented framework that incorporates dimension reduction directly into pre-trained LLM workflows. First, we extract embeddings from text documents; next, we pass them through a supervised augmented autoencoder to learn low-dimensional, task-relevant latent factors. By modeling the nonlinear structure of complex embeddings, AEALT outperforms conventional deep-learning approaches that rely on raw embeddings. We validate its broad applicability with extensive experiments on classification, anomaly detection, and prediction tasks using multiple real-world public datasets. Numerical results demonstrate that AEALT yields substantial gains over both vanilla embeddings and several standard dimension reduction methods.