The Rise of AI Chatbots: 4 To Keep Your Eye On

Artificial intelligence (AI) chatbots have been gaining traction in recent times, where discussions are no longer around the relevancy of such tools, but rather on how they can be integrated into existing apps or workflow. 

One of the fastest-growing apps in this space is ChatGPT, which was launched in November 2022 and quickly gained over 1 million users just within its first five days ^[1]. This success underscores the growing interest in AI-powered chatbots. In this article, we will take a deep dive into different companies, their respective chatbots, and how the company’s share price is affected.

Microsoft (NASDAQ: MSFT): ChatGPT and Bing Chat

As a household name, Microsoft has been synonymous with innovation since its inception in 1975 by Bill Gates and Paul Allen. With a market capitalisation of $1.787 trillion as of December 2022, the tech giant is well-known for software products like Microsoft Windows ^[2]. Now, Microsoft is setting its sights on artificial intelligence (AI) through a strategic partnership of $10 billion with OpenAI, the creator of ChatGPT.

The use cases and industry applications for ChatGPT are vast, ranging from customer support, virtual assistants to content generation. This versatile AI chatbot can also help to streamline business operations and enhance user experiences across various businesses. For example, businesses can use ChatGPT technology to help generate responses for their customer service chatbots, so they can automate many tasks typically done by humans and radically improve response time ^[3].

Microsoft is also able to seamlessly integrate ChatGPT with its suite of products, such as Bing search and Microsoft Teams. Microsoft’s proprietary Prometheus model combines the best of OpenAI’s technology with Microsoft’s expertise, ensuring optimal performance for Bing search to generate responses. This powerful upgrade to the core Bing search ranking engine has led to the most significant rise in relevance in two decades ^[4].

Furthermore, Microsoft is offering ChatGPT through its Azure OpenAI service, simplifying the process for developers and businesses to integrate ChatGPT into their applications. The company’s stock price has since risen, with a gain of 6.5% on 16 March 2023, due to the release of GPT-4, the latest generation of ChatGPT ^[5].

Figure 1: Microsoft price chart. Image obtained from Trading View. 

Alphabet Inc (NASDAQ: GOOGL): Bard AI

Google, founded in 1998 by Sergey Brin and Larry Page, is a global technology giant primarily known for its leading search engine services. The company’s reach extends beyond search engine capabilities, with its 2006 acquisition of YouTube helping to extend Google’s reach into the video search engine section. This has also contributed significantly to its revenue growth by expanding its advertising opportunities. In 2017, Google became a subsidiary of the holding company Alphabet Inc, a new parent entity that would unite its widening interests and product lines. As of December 2022, Alphabet’s market capitalisation is worth $1.145 trillion ^[6].

In response to the ever-growing popularity of ChatGPT, Google has developed its own version of an AI chatbot named Bard AI. Bard AI employs Language Model for Dialogue Applications (LaMDA) as its model, which has been trained on trillions of words to ensure it can generate reasonable responses and maintain a conversational tone.

Users can interact with Bard AI by typing a query or request into a text box, and the AI will produce a response using conversational language. This is in line with Google’s strategy to integrate Bard AI with its search engine, with the ultimate goal of enabling conversational interactions between users and the search engine in the hopes of improving the quality of the search results.

However, during Bard AI’s demo launch, it provided an inaccurate response that caused Alphabet, Google’s parent company, to experience a 7.7% drop in shares on 8 February 2023, resulting in a $100 billion loss in market value ^[7]. Concerns were raised about the AI’s competency, leading to a further 5.1% drop in shares on 9 February 2023, resulting in a total market value loss of $170 billion for the company ^[8]. The significant sell-off illustrated how crucial success in the AI arms race has become for companies and traders.

Figure 2: Alphabet price chart. Image obtained from Trading View. 

Baidu (HKG: 9888) : Ernie

Baidu, Inc. is a Chinese multinational technology company founded in January 2000 by Robin Li and Eric Xu. The company is headquartered in Beijing’s Haidian District and has become one of the largest AI and internet companies globally, offering internet-related services, products, and artificial intelligence (AI) solutions. One of the company’s notable projects is the Apollo Project, the world’s leading autonomous driving and AI program, operated by Baidu with a vast partner group of 210 global partners such as BMW, Ford, and Toyota ^[9].

In response to the OpenAI ChatGPT service, Baidu has released its own version of an AI chatbot known as ERNIE (Enhanced Representation through Knowledge Integration) Bot ^[10]. The chatbot is a new generation large language model (LLM) and generative AI product that excels in understanding the Chinese language and culture, generating literary and business writing, performing complex mathematical calculations, and producing multi-modal content ^[11]. The ERNIE Bot can comprehend human intentions and deliver accurate, logical, and fluent responses approaching human level.

Baidu experienced a setback during the demo launch of its bot, causing its shares to drop by 6.4%, failing to impress investors ^[12]. However, within a day, the shares of Baidu rebounded, and its stock price soared by 14.3% on 17 March 2023 in Hong Kong ^[13]. This was due to the company’s announcement that more than 30,000 businesses had signed up to test its chatbot service within two hours of the demonstration, leading to a reversal in the stock’s value the following day ^[14].

Figure 3: Baidu price chart. Image obtained from Trading View. 

Alibaba (NYSE: BABA): Tongyi Qianwen

Alibaba Group, a Chinese multinational technology company, was founded by Jack Ma in December 1999 and has since become a powerhouse in e-commerce, retail, internet, and technology sectors. Its primary platforms, Taobao, Tmall, and Alibaba.com, collectively serve millions of users and host countless merchants and businesses ^[15]. In its 2014 US initial public offering (IPO), Alibaba raised an impressive $25 billion, making it one of the largest IPOs in US history ^[16]. As of December 2022, Alibaba’s market capitalisation is worth $ 224.03 billion ^[17].

On 11 April 2023, Alibaba Cloud, the digital technology and intelligence division of Alibaba Group, unveiled its latest large language model, Tongyi Qianwen ^[18]. This AI model will be integrated into various Alibaba businesses, enhancing user experiences with features such as automated email composition and meeting note summaries. Additionally, users can generate promotional campaign plans and draft business proposals using simple prompts. Beta access to the LLM model will be available for Alibaba Cloud customers, allowing them to create customised AI features cost-effectively.

Despite these announcements, Alibaba’s share price experienced a downtrend throughout April 2023, as seen in the chart below. This decline was due to Softbank selling almost all of its remaining Alibaba shares, worth $7.2 billion, through prepaid forward contracts ^[19]. Consequently, Softbank’s stake in Alibaba reduced to 3.8%, causing the company’s share price to drop nearly 3% in after-hours trading on 12 April 2023 ^[20].

Figure 4: Alibaba price chart. Image obtained from Trading View. 

Trading Opportunities

As the race for companies to create the best AI chatbots intensifies, the rapid rise in artificial intelligence presents a trading opportunity in the technology sectors, with focus not just on industry giants, but also up-and-coming young companies which continue to innovate and compete in the AI space. 
Traders looking to trade these stocks can open a live trading account in less than five minutes with Vantage and begin trading with $0 commission on all US stock CFDs. Seize the chance to ride on this AI revolution and diversify your trading portfolio in the exciting world of artificial intelligence through stocks CFDs.

References