Talk about ChatGPT : How Can Investors Make Money With This Revolutionary AI Tool?

Author: Ansar Abuyev, analyst at Freedom Finance Global

They call it a breakthrough, compare it to the invention of the Internet and the debut of the first Apple iPhone in 2007. We are talking about ChatGPT - a new promising growth trigger among technology stocks.

Not long ago, the information space of the academic community exploded with reports of a new revolutionary artificial intelligence that is capable of writing essays at the level of excellent students. Teachers called it a disaster for the education system, the media - a threat to intellectual workers, and Bill Gates compared the development of ChatGPT by the American company OpenAI to the invention of the Internet. However, when exploring new trends that can change our lives in the future, it is worth considering benefits they could offer right now.

OpenAI's Rise in Popularity

 

Source: Meet Glimpse

ChatGPT is built on the basis of machine learning and is presented as a self-learning chatbot with artificial intelligence, capable of covering a wide range of topics and functions - from searching and analyzing data, writing lines of code (even malicious ones), tutoring in mathematics and issuing creative ideas for celebrating a birthday.

This AI-based tool can become a new stage in the evolution of the classic Google search engine or its assistant. When asked about its prospects, the chatbot itself immodestly says that they are limitless, pointing to the possibilities of use in various fields, including education, medicine, business, science and technology.

The use of artificial intelligence in business opens up paths in two interconnected areas - commerce (both electronic and offline) and the market of chips that will be tailored for their use in work. Simple versions of virtual consultants are already "working" in companies such as Kcell and Beeline, answering frequently asked questions of users. After the presentation of Google Duplex, a phone service using artificial intelligence, in 2018, one could come across dialers that imitate the background noise of call centers and ask simple questions on behalf of Kazakhstani companies.

Chatbot developer shares 

The popularity of ChatGPT have provoked excitement among investors in the tech sector. The first row of beneficiaries of the technology for creating smart chatbots includes the investors in the OpenAI project (the developer of ChatGPT) themselves – Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOGL). These companies are currently leading the “artificial intelligence race”, in which Microsoft is currently leading by a small margin. The company has already announced multi-billion dollar investments in OpenAI (rumored to be up to $10 billion) and the introduction of artificial intelligence for its Bing search engine. It will allow the user to communicate with it in order to get more detailed answers to search queries. In an interview with CNBC, Microsoft CEO Satya Nadella said he believes AI-powered search is the company's biggest achievement since the advent of cloud services 15 years ago.

 

 

Search Engine Market Share 2022

 

Source: Oberlo (based on StatCounter data)

Google's response was a ChatGPT analogue called Bard, during the presentation of which the corporation showed slides where, with the help of a chatbot, you can, for example, show the pros and cons of buying an electric car and plan a trip to Northern California. However, Google notes that the company's reputation may suffer if it promotes AI chat technology too quickly.

Chinese Baidu (NASDAQ: BIDU) and Alibaba (NYSE: BABA) are also preparing their own versions of AI-based interlocutors. Moreover, this market is capable of going its own way, since ChatGPT-based technologies may be banned in China, and the Americans, in turn, are able to restrict Chinese technologies on their territory.

 

China AI Market Size Since 2016, Forecasted to 2025 (in RMB Billions)

 

Source: Statista

Among the second tier of beneficiaries is Apple (NASDAQ: AAPL). The manufacturer’s A- and M-series chips are said to have components that enable machine learning features like Face ID, another example of its advances in AI.

IBM (NYSE: IBM) has used its AI capabilities in recent years to help companies automate tasks and create virtual assistants. The market expects IBM to continue to embed AI into its software used for security and automation applications, rather than creating separate products.

AI Market Size 2021-2030 ($ Billion)

Source: Precedence Research

Chip maker market. Demand for machine learning and robust AI performance could spawn a market for chips optimized for these tasks, or bolster existing semiconductor makers. Bernstein analysts note that a typical ChatGPT query requires nearly 400 quadrillion operations, which can be handled by chip makers with deep AI expertise, such as Nvidia (NASDAQ: NVDA) and Dell (NYSE: DELL).

It is estimated that 100 million ChatGPT queries per day would require $1-2 billion in annual purchases of Nvidia H100 PCIe chips. At one billion queries per day, we can expect purchases of $10-20 billion per year. Add in Google searches, which are about 10 billion per day, and Bernstein predicts potential sales of H100-generation GPUs worth $150 billion per year.

 

AI Chip Market Shares by Application from 2021 with Forecasts to 2031

 

Source: Allied Market Research

Market ETFs. For investing in AI-related funds, you can consider ETFs such as the ARK Autonomous Technology & Robotics ETF (ARKQ), iShares Robotics and Artificial Intelligence Multisector ETF (IRBO), and Global X Robotics & Artificial Intelligence ETF (BOTZ).

The US tech sector has been under intense pressure in 2022. Weaker demand for chips, high inflation, and rising rates have played a negative role in the development of the industry. However, ChatGPT hinted at a revival of the old demand for tech stocks, which was observed before last year. If significant investment in commercializing the potential of artificial intelligence can lead to a practical breakthrough by the time the Federal Reserve begins to ease monetary policy, then this will be a significant incentive for the growth of the above-mentioned stocks.