In just a few months, ChatGPT, the disruptive AI chatbot made by OpenAI, has taken the world by storm.
The technology has wowed everyone from CEOs to technologists to ordinary users, performing a range of activities like writing poetry and code or explaining complex subjects in neatly packaged paragraphs. It's also passed high-level exams for law school, medical licensing, and MBA programs.
Using a simple chat interface, ChatGPT, which stands for Chat Generative Pre-Trained Transformer, is able to answer questions directly and is as easy to use as Google Search. The free AI chat interface signed up 100 million users in just two months after its launch on Nov. 30, 2022, and has the potential to disrupt industries from internet search to content creation.
In this article, we'll discuss the implications for ChatGPT and robot chat more generally, how you can get exposure to it as an investor, and whether you should invest in ChatGPT.
How to invest in ChatGPT
How to invest in ChatGPT
ChatGPT isn't publicly traded, and OpenAI, the company that built it, isn't either. However, there are a number of ways to get exposure to ChatGPT.
The most direct one is through Microsoft (MSFT 0.17%). Microsoft has had a strategic partnership with OpenAI since 2019, and has invested billions of dollars into the AI start-up over its history. After ChatGPT was unveiled in early 2023, Microsoft invested $10 billion into OpenAI, showing both the company's confidence in OpenAI's potential and its belief that artificial intelligence is the next major computing platform.
Another way to get exposure to ChatGPT is through NVIDIA (NVDA 1.47%). NVIDIA is one of the world's most valuable semiconductor companies, and the leading producer of graphics processing units. Its GPUs are often used for artificial intelligence purposes, training large language models like ChatGPT and processing large amounts of data. They are a key component in many machine learning models.
Finally, Perion Network (PERI 0.4%) is another potential winner from the ChatGPT rollout. Perion is a small-cap ad tech stock, but it has a strategic partnership with Microsoft's Bing search engine, and Microsoft is rolling out a new version of Bing, powered by ChatGPT. If Bing gains market share on Google with the help of ChatGPT, Perion is likely to be a big winner.
|Microsoft||(NASDAQ:MSFT)||$2.44 trillion||Diversified global tech giant|
|NVIDIA||(NASDAQ:NVDA)||$1.09 trillion||Leading maker of a graphics chips|
|Perion Network||(NASDAQ:PERI)||$1.53 billion||A small-cap ad tech company|
Microsoft is best known as a diversified global tech giant. It makes money from everything from its Windows operating systems, to its Azure cloud infrastructure service, to subscription software products like its Office software suite, as well as hardware like Surface, gaming products under Xbox, and the LinkedIn professional social network.
However, more recently, Microsoft has been getting attention for its strategic partnership with OpenAI. The company has bet big on OpenAI and ChatGPT. Microsoft CEO Satya Nadella has called AI the next major computing platform, and has already leveraged the power of ChatGPT and OpenAI's tools in a number of products, including Azure.
Microsoft's biggest bet with ChatGPT is on Bing, and Nadella has said that a new search engine race is happening. He's also eager to take the fight to Alphabet's Google (GOOGL 0.66%)(GOOG 0.7%). Nadella views the landscape in search as asymmetric, with Alphabet unable to afford losing market share in search, and any gain being a win for Bing.
If you're looking for the company that's most closely connected with OpenAI and ChatGPT, Microsoft is your best choice. However, the company is so big that only a small amount of the business is exposed to ChatGPT.
NVIDIA stock has taken off over the last decade as its graphics processing chips have become a vital part of everything from gaming to self-driving cars to artificial intelligence.
AI comes with extraordinary computing demands, and NVIDIA's chips are able to handle the workload better than its competitors.
For example, UBS (UBS 0.08%) estimates that 10,000 NVIDIA graphics processing units were used to train ChatGPT, and some analysts estimate that 30,000 of its GPUs are now being used to run OpenAI's chatbot.
NVIDIA has also teamed up with Microsoft to build a massive cloud AI computer using tens of thousands of NVIDIA GPUs and other NVIDIA AI software tools.
Given NVIDIA's strength in AI computing power, including products like the Omniverse, NVIDIA looks like a good AI stock to own if you're looking for an investment poised to make gains from the growth in artificial intelligence.
3. Perion Network
3. Perion Network
Another way to get exposure to ChatGPT is through Perion Network (PERI 0.4%), a small-cap ad tech firm. Perion is best known for its intelligent hub, which connects advertisers and publishers to optimize ad placement and inventory for both parties.
However, the company also brings in almost half of its revenue through search, largely through its partnership with Bing. Perion is one of the ad tech companies the Microsoft search engine uses to help to optimize ads and conversions. Perion gets revenue share through Bing when a user click on an ad leads to a sale.
In its recent earnings presentation, Perion shared a quote from Microsoft CFO Amy Hood, who said that each additional percentage of market share that Bing gets translates to almost $2 billion in annual revenue, meaning that it wouldn't take much to move the needle for Perion.
Considering the stock is trading at a price-to-earnings ratio of 17, the stock could soar if the new Bing begins to gain traction.
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Should you invest in ChatGPT?
Should you invest in ChatGPT?
ChatGPT and generative AI have the potential to change everything from the way we work to the way we learn and are entertained.
It's still very early for ChatGPT and the next iteration of AI, and some are even asking if ChatGPT is safe to use since the product is new and has only just started to be monetized. Additionally, the hype around AI stocks has surged in recent months, leading shares of AI stocks like C3.ai (AI -0.57%) and anything else connected to artificial intelligence to soar.
However, for risk-seeking investors, it's not a bad idea to invest some of these ChatGPT stocks. Microsoft seems like the most stable bet of the bunch; the company has a wide range of products to make use of the AI chatbot and its partnership with OpenAI will help it benefit from future advances in generative AI technology.
NVIDIA should also be a winner since it's likely to benefit from increased demand for computing power, and Perion Network stock has a lot of upside potential if the new Bing begins to catch on.
Although the tech stock crash in 2022 may have chastened tech investors, ChatGPT has crystallized the potential of AI and is likely to kick off a new race in artificial intelligence.
To hedge your bets, investing in all three of these stocks and holding them for the long term may be the best way to get exposure to ChatGPT. You can also invest in an AI ETF for broad exposure to the sector.
Any new technology comes with risk for investors, but the upside potential from the new generative AI technology could be enormous.