How Microsoft, Google Are Taking on ChatGPT, What It Means for the Stocks
- 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.
ChatGPT has taken the stock market by storm, massively boosting the value of companies like Buzzfeed who say they’ll incorporate its technology into their business.
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 released a version of Teams premium that uses OpenAI technology last week before making a major announcement about Bing on Tuesday.
Microsoft announced new, AI-powered version of its search engine that will integrate chatbot technology that the company’s chairman believes will help “people get more from search and the web“.
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 11.6% 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 and started testing out potential rivals to OpenAI’s tech.
In a blog post on Google’s website Monday, CEO Sundar Pichai unveiled the Bard AI service – Google’s new competitor to ChatGPT. Pichai said Bard would be opened up to “trusted testers” starting Monday and would be made widely available to the public in the coming weeks.
“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 22% in 2023 – suggesting its shareholders aren’t too worried about the rise of ChatGPT either.
Chinese search giant Baidu is also working on developing a rival to ChatGPT to use in its services.
The company said Tuesday that it was on track to roll out its “ERNIE Bot” competitor in March, sparking a 15% rally in its share price.
But analysts generally expect Baidu’s bounce to prove short-lived – because so many of its competitors, including Microsoft and Google, are working on similar AI programs.
“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.”
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