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, and it continues to get better with regular updates.
ChatGPT (the name stands for "Chat Generative Pre-Trained Transformer") uses a simple chat interface 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 it 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 -0.24%), the tech giant that has had a strategic partnership with OpenAI since 2019 and has invested billions of dollars into the AI start-up. After ChatGPT was unveiled in early 2023, Microsoft invested $10 billion in 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 0.91%). Nvidia is one of the world's most valuable semiconductor companies and the leading producer of graphics processing units. Its GPUs and accelerator 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, and they have been in such high demand that there are frequent shortages.
Finally, Perion Network (PERI -0.48%) is another potential winner from the ChatGPT rollout. Perion is a small-cap adtech stock, but it has a strategic partnership with Microsoft's Bing search engine, and Microsoft has rolled 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.It also recently launched a generative AI audio solution, WAVE, that allows it to create customizable ads with an AI voice.
|Diversified global tech giant.
|Leading maker of a graphics chips.
|A small-cap ad tech company.
Microsoft is best known as a diversified global tech giant. It makes money from a wide range of products, including its Windows operating system, Azure cloud infrastructure service, subscription products like its Office software suite, 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 and Copilot, Microsoft's new AI assistant.
One of Microsoft's biggest bets with ChatGPT is on Bing. Nadella has said that a new search engine race is happening, and he seems eager to take the fight to Alphabet's Google (GOOGL -3.83%)(GOOG -3.66%). Nadella views the landscape in search as asymmetric, with Alphabet unable to afford to lose 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. Demand for its chips is already soaring as the company sells the building blocks for AI platforms. More than a year after ChatGPT's release, Nvidia has emerged as the biggest winner from the AI boom, since cloud infrastructure companies and others need its chips to run AI models. Revenue more than tripled in its third-quarter report.
Given Nvidia's strength in AI computing power, it 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.
Another way to get exposure to ChatGPT is through Perion Network (PERI -0.48%), a small-cap adtech 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 adtech companies the Microsoft search engine uses to help optimize ads and conversions. Perion gets revenue share through Bing when a user clicks on an ad that leads to a sale.
In one 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 12, the stock could soar if the new Bing begins to gain traction. Perion is also harnessing the power of generative AI with products including a new technology that allows it to generate customizable audio ads with an AI voice targeting customers in specific demographics and geographies.
Related investing topics
Investing in Quantum Computing StocksAn in-depth look at the best quantum computing stocks in the U.S stock market this year.
Investing in Cloud Computing StocksMoving operations to the cloud is the way of the future for many companies.
Investing in a Quantum Computing ETFQuantum computing is becoming increasingly affordable and effective to the point that there's now a quantum computing ETF.
Should you invest?
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. 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 sparked a surge at the beginning of 2023, leading shares of AI stocks like C3.ai (AI 7.42%) and anything else connected to artificial intelligence to soar. More recently, a number of those stocks have pulled back as the hype ebbs.
To hedge your bets, investing in all three of these stocks and holding them for the long term may be one of the best ways to get exposure to ChatGPT. You can also invest in an AI exchange-traded fund (ETF) for broad exposure to the sector.Any new technology comes with risk for investors, but the upside potential of the new generative AI technology could be enormous.