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.
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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.
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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.
Featured Tech Stories
- Intel Corp., facing rapidly falling revenue and profit, is cutting executive pay across the company to weather a shaky economy and conserve cash for an ambitious turnaround plan.
- Snap Inc. is forecasting its first quarterly revenue decline, citing several changes to Snapchat’s ad products that could be disruptive to the social media app’s business.
- More than 2 million users of Snap’s social networking app, famed for its face-changing filters and disappearing messages, have agreed to pay for premium features.
- Last year was the toughest on record for businesses that rely on digital advertising. Snap says the pain is stabilizing. “It looks like the demand for advertising hasn’t gotten better, but it hasn’t gotten significantly worse either,” Chief Executive Evan Spiegel said on a call with analysts Tuesday.
- Advanced Micro Devices Inc., the second-biggest maker of computer processors, gave a better-than-feared sales forecast for the first quarter, as gains in the lucrative server market helped offset a collapse in demand for chips for computers. pc.
- SK Hynix Inc. stood by its plans to halve capital spending by 2023 after reporting its biggest quarterly loss on record, hit by a record chip industry slump.
- OpenAI, which launched the viral ChatGPT chatbot last year, unveiled a tool that claims to help show whether the text was created by an artificial intelligence program and impersonated human.
- Shares of Electronic Arts Inc. plunged after the video game maker gave a disappointing outlook for the current quarter due to a six-week delay in the release of its next Star Wars game.
- Western Digital Corp. is receiving a $900 million investment led by Apollo Global Management Inc., gaining financial power at a difficult time for the memory industry that could see further consolidation. The shares fell 6% in late trading on a disappointing earnings forecast.
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