ChatGPT unleashes a stampede of stock traders for all kinds of AI
“We’ve had tons of episodes like this before where a group gets hot, and everyone just piles on everything about it.”
A $480 billion chipmaker whose processors are used for complex computing tasks. A digital media company looking to extract content from emerging technologies. A small software company whose shares traded below $1 for most of December.
Here are some of the disparate businesses whose stocks are benefiting from the euphoria surrounding artificial intelligence, the latest buzzword to whip traders into speculative foam, conjuring memories of bubbles past.
The skyrocketing surges in companies that have AI in their names remind veteran market professionals of past fads like 2017 one sparked by blockchain technology.
In that period, there was a scramble for exposure, both by companies and traders, only to see the frenzy fade and stock gains disappear. While AI is undoubtedly a huge growth opportunity and an issue investors should take seriously, buyers should beware, said Michael O’Rourke of Jones trading.
O’Rourke, the company’s chief market strategist, said in an interview, “We’ve seen plenty of situations like this previously when a group goes hot and everyone just pounds on everything about it.” It’s going to be an exciting ride for everyone who wagers on names and tickers. You are not investing if you are speculating.
The enormous popularity of OpenAI’s ChatGPT tool has generated a lot of excitement about potential AI use cases since it debuted late last year. Microsoft Corp. is putting $10 billion into OpenAI, which requires money and computer capacity from the cloud to run models that are ever more complicated. Microsoft said it plans to use the OpenAI models in current and future products.
Nvidia Corp., the semiconductor maker, has been touted by Wall Street analysts as a beneficiary of increased investment in artificial intelligence as it dominates the market for graphics chips that provide the computing power behind software models. Its shares rose 34% in January, Nvidia’s best month in nearly six years.
The justification for rallies in several other equities is weaker. BigBear.ai Holdings Inc., which uses artificial intelligence to help clients analyze data, saw its shares jump nearly fivefold last month.
BuzzFeed Inc., the media company that has been cutting costs amid a slump in digital advertising, jumped more than 300% over two days last week after its CEO pledged to make AI-inspired content part of your “core business.”
Another software developer, C3.ai Inc., which includes Raytheon Technologies Corp. and Baker Hughes Co. among its customers, had a record-breaking 77% increase last month.
On Wednesday, shares of LivePerson Inc. rose as much as 19% after the customer service software maker said it plans to include OpenAI generative capabilities.
The biggest search engine provider in China, Baidu Inc., has also entered the race. A person with knowledge of the situation claims that the firm intends to launch a chatbot service similar to ChatGPT, even though this week’s announcement did not increase the share price.
Until the bubble bursts, O’Rourke said he wouldn’t be surprised to see companies add AI to their names or a jump in secondary stock offerings as executives look to capitalize on the euphoria.
It’s still early in the process, he added. “There will likely be three times as many names and tickers shifting in a month as there are now.”
Recent investor optimism toward technology stocks has helped push the Nasdaq 100 Index above its 200-day moving average.
That is a key measure for long-term momentum, and the tech indicator has been trading below it for 203 straight sessions, making it the longest streak in roughly two decades.
The index is up almost 11% this year, but the Federal Reserve rate on Wednesday and a series of earnings from big tech will show if this rally has any strength.
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