Sopa Images/Getty Images
- ChatGPT’s viral success has caught the eye of big tech companies and investors.
- Microsoft is working to integrate the bot into its search engine, while Google is scrambling for alternatives.
- Here’s what the AI chatbot’s popularity could mean for tech stocks.
The intelligent language tool – which can write cover letters, produce dating app messages, and even offer up generic investing advice – has become a buzzword in the world of finance, while some venture capitalists predict it’s the “next platform shift” in tech.
But it’s raised eyebrows among some market analysts, who’ve drawn comparisons with companies’ short-lived and unsuccessful pivot to the metaverse in 2021.
Major tech names like Microsoft, Google parent Alphabet, and Chinese tech giant Baidu have all taken steps in recent weeks to show they’re trying to harness the technology underpinning OpenAI’s ChatGPT.
Here’s what their efforts to integrate the chatbot into their businesses could mean for investors.
Microsoft said in January that it would pour $10 billion into ChatGPT creator OpenAI as part of a “multiyear, multibillion-dollar” investment. It had already provided $1 billion in backing in 2019.
The tech giant on Thursday released a version of Teams premium that uses OpenAI technology, and it’s reportedly planning to launch a version of its search engine Bing powered by ChatGPT.
Getting ChatGPT into the little-used Bing is likely to give Microsoft a considerable edge over its Big Tech rivals and lift its share price, analysts have said. Shares have jumped 7.6% year-to-date, although investors’ expectation of interest-rate cuts later this year has helped most tech stocks to rally in 2022.
“Microsoft’s investment in OpenAI will translate to significant underappreciated upside,” D.A. Davidson analyst Gil Luria said in a research note last month.
“Longer-term, incorporating ChatGPT into Bing may provide Microsoft with a once-a-decade opportunity to unseat Google’s Search dominance.”
Some analysts believe that Google parent Alphabet under threat from the rise of ChatGPT, because the AI bot is a potential rival to its search engine.
In December, the company’s management issued a “code red” about the bot’s launch. Google is reportedly already testing out potential rivals to OpenAI’s tech, including a homegrown chatbot called “Apprentice Bard”.
But analysts say that the bot’s rise won’t weigh on Alphabet’s share price in the longer-term. That’s because ChatGPT’s only unique feature is that it’s available to the public already, and Google is likely developing a stronger alternative in-house.
“ChatGPT has truly revolutionized many types of information queries and other types of tasks,” Saxo Bank’s top equity strategist Peter Garnry said in a recent research note.
“But it remains very doubtful that it could be a replacement for Google, nor a new phase of the internet.”
Alphabet shares have jumped just under 21% in 2023 – suggesting its shareholders aren’t too worried about the rise of ChatGPT either.
It’s not just US big tech Chinese search giant Baidu is also working on developing a rival to ChatGPT to use in its services, Bloomberg reported Tuesday.
Shares jumped 3.2% the day of the report, lifting Baidu to a 22% gain for January.
But just as analysts said ChatGPT was unlikely to threaten long-term dominance of incumbent big techs, they generally expect Baidu’s share-price bounce to prove short-lived. That’s because its competitors are lining up similar AI.
“There has been fervent pursuit of the ChatGPT concept in China, one of the countries that are most active in championing AI, with many large companies preparing to launch similar products,” said Shen Meng, director at Chanson & Co in Beijing. “The rally may fade after a short-term run.”