The launch of ChatGPT in the second half of 2022 ushered in a new era of technological innovation few could have imagined. As the tool gained momentum, with users reportedly reaching his 100 million mark within about two months of its introduction, Wall Street praised generative artificial intelligence, making its debut in his 2007 Seen as similar to his iPhone launch. At first glance, companies like Alphabet and Microsoft seemed that way. While poised to take advantage of AI, chip makers developing tools to underpin large language models have been hit by a staggering inventory spike. His explosive quarterly printout for Nvidia this week has only boosted AI investment deals. GOOGL MSFT YTD Mountain Alphabet and Microsoft said so far this year that Wall Street was just beginning to see the investment potential of AI big winners, and Goldman Sachs predicted that the technology could add $7 trillion to the global economy over the next decade. We anticipate that it will generate growth. But not all sectors will benefit equally, and online education provider Chegg’s plunge of nearly 50% following its quarterly earnings earlier this month raises the downside risks of AI and the potential impact of AI on some industries. highlights the challenges it poses. Chegg CEO Dan Rosensweig said on a conference call earlier this month that interest in ChatGPT has skyrocketed among students, a move that weighs on new customer growth. the company said it was thinking. Mr. Chegg appears to be the first soldier to fall in the growing AI war, with Wall Street and the investment community criticizing the downsides of this seemingly perfect technology and how it jeopardizes its long-standing business model and lucrative revenue stream. I was forced to rethink what I might expose to. CHGG last month his Chegg stock price is now a million mountains and he is not part of the economy that cannot be hidden from the AI. From manufacturers to high-end retailers, companies are adopting this technology to improve their products. But some companies face more dangers and more difficult challenges to overcome than others. AI chatbots in the freelancing market that can generate content pose a significant risk to the freelancing market as bots improve, and may be superseded by the need for services that connect job seekers such as Fiverr and Upwork. . RBC Capital Markets analyst Brad Erickson stressed in a recent memo that AI could actually boost these companies in the long run and improve their productivity, but concerns about AI have increased. He said it was likely to put pressure on stock prices in the short term. “We generally agree with management’s comments about how AI is actually driving demand or is likely to be replaced by AI. Given the ongoing activity and innovation, it seems likely that this will become an immovable object for the foreseeable future, with multiple expansions.” and lowered its price target. During its earnings call earlier this month, Upwork highlighted how it is using AI to improve its platform. CEO Hayden Brown responds to analysts’ concerns about AI and its impact on freelance firms, addressing new developments at Upwork and why AI presents ‘huge potential’ for the company bottom. “I would like to emphasize that we do not see any negative impact from AI today,” Brown said. “And if you look at the work happening within the platform, there are some interesting things in almost every category we serve. BTIG said that in the freelance space, the impact of AI will vary by sector. Research conducted by the company shows that while these tools can potentially increase demand in areas such as machine learning and engineering, they can negatively impact writing, design and customer service jobs. UPWK YTD Mountain Upwork stock price year-to-date Education Services After Chegg’s sale in early May revealed the detrimental impact of ChatGPT on some business models, many Wall Street analysts were skeptical of education services. viewed as being at particular risk of disruption. According to equity research firm Redburn, Chegg is at risk of losing its homework solution to AI, and education publisher Pearson said some students are using textbooks and e-books as homework tools such as ChatGPT. If you replace it, it will be vulnerable to chaos by AI. Redburn said many students are opting for cheaper alternatives to teaching materials and appear to be “less concerned about privacy and ethical issues.” On the other hand, the limitations of applicable copyright rules make it easier to train AI tools. Nonetheless, Redburn said Pearson’s use cases could grow because of problems with the accuracy of AI tools. We are also developing some tools to detect AI-generated answers. Wall Street has become more bullish on Pearson after the previous selloff, and Bank of America recently upgraded its rating on Pearson stock to “buy.” Morgan Stanley upgraded the stock to overweight, citing generative AI as a potential boost to corporate value. UBS expects more volatility in the space in the near future amid lingering fears of disruption, but these companies should benefit in the long run by integrating new tools into their products. “While increased productivity and technological advances should benefit edtech products in the long term, new competition could create temporary disruptions and headwinds as companies build their AI capabilities. ‘, UBS said in a recent memo. PSO 1M Mountain Pearson’s stock performance last month As AI usage grows, Wall Street sees it as a tool teachers can use to teach new topics or identify students who are falling behind in class while providing the necessary improvement tools, analysts at Jefferies said. Brent Till wrote in a recent memo: Online course platform Udemy is also among the education technology stocks at risk from the rise of AI, Till said, suggesting that consumers may turn to AI rather than websites to learn new tasks. pointed out there is. At the same time, it can also benefit consumers who want to improve their skills and create better content. Music Industry Music labels that rely on high royalties and copyright protection could face significant headwinds as AI blossoms. In the distant future, music-streaming companies such as Spotify may be able to cut costs by producing the next pop sensation themselves, using independent music created using AI tools, Credi said. Douglas Mitchelson of Switzerland wrote in a recent memo: WMG YTD Mountain Warner Music Group’s 2023 stock price will allow AI-generated songs to help streamers avoid the hefty royalties that come from today’s reliance on new content, creating a fundamental foundation for the industry as a whole. Practices can be ruined. For major studios and labels such as Warner Music Group and Universal Music Group, this means the reversal of decades of lucrative revenue streams, said Rosenblatt analyst Barton Crockett. points out. Copyright issues are also a major obstacle for music companies. Copyright laws and how they apply to AI are unclear in most countries, and some officials are considering loosening protections to encourage innovation, Redburn said. mentioned in a recent note. Analysts say potential piracy includes reproductions of artist likenesses and voices, which could reduce the catalog value of many music companies. But charging AI tools for the use of material could create another potentially lucrative revenue stream for music companies, said Morgan Stanley’s Omar Sheikh in a recent note to clients. writing in a memo. Web Builders Many small businesses rely on website builders to easily create and promote their online presence. But emerging AI tools may eventually replace the few simple website design functions these companies specialize in. Despite such concerns, other analysts see website building companies such as GoDaddy, Wix and Squarespace as beneficiaries of his AI, with Citi analyst Yigal Alunian recently sees the company’s sluggish stock as a buy. chance. WIX YTD Mountain shares this year’s achievements, “AI democratizes web-building capabilities and puts more control in the hands of users because they can build websites without expert help.” “It’s easier to build,” he said. “But in most web building, site creation doesn’t end there, it involves running the business and regular maintenance.” Despite immediate concerns, Bank of America analyst Nat Schindler sees Wix as particularly well positioned to weather this volatility. “In our view, AI is unlikely to pose a significant threat to Wix due to its lack of integration and customization,” he said in his recent memo. “Wix has these benefits [a] “A decade of optimization and an extensive suite of creator tools that simplify processes.” Customer service and call centers AI tools that can replicate human agents typically use live agents to respond to customers Call centers and customer service companies face another obstacle. AI can cause problems. Five9, a provider of cloud software solutions used for customer engagement, is putting Nice at risk by reducing demand for contact centers, and Jefferies’ Till said in a recent report that the company and his It says Five9 is one of the companies most endangered by AI. Oppenheimer analyst Timothy Horan recently emphasized that while AI tools may be able to handle simple customer interactions, businesses need live agents to handle more complex needs. “NICE is best positioned to integrate AI,” he said. “Add to that years of labeled customer care data, a market leader position, a strong balance sheet and weak competitors,” he said. Similarly, Deutsche Bank analyst Matthew Niknam emphasized in a recent note that AI presents more opportunities than risks, providing an “underappreciated upside tailwind.” For five nines. Morgan Stanley analyst Meta Marshall noted that conversations with live agents remain important for businesses and customers alike. In her recent memo, Marshall said Five9 were “aggressive in battle.” [the] The story of AI being negative [Contact-Center-as-a-Service]Instead, it highlighted it as an opportunity. — CNBC’s Michael Bloom contributed coverage.
