The Zhitong Finance APP learned that the rise of ChatGPT once triggered concerns that it would disrupt various industries. Two years after the release of this generative artificial intelligence (AI) chatbot, the situation has not turned into a disaster as some investors predicted, but many people are still feeling anxious.
Earlier this month, Adobe (ADBE.US) announced disappointing revenue guidance, and its stock price then plunged. This has once again raised concerns that despite developing its own AI tools, the company may still lose its business to AI start-ups such as OpenAI and Runway AI in the future. Under such circumstances, Adobe has fallen by more than 13% so far this month, marking its worst monthly stock performance in two years.
For investors, Adobe is the latest warning sign, although it remains undetermined whether AI is beneficial or harmful to its business and similar ones. Despite all the concerns, it is still unclear who the winners and losers will be.
Gil Luria, the director of technology research at law firm D.A. Davidson, said, “It’s too early to say whether a company can adapt to AI or will become a victim along the way.” He added that AI is the most disruptive technology since the Internet, but it will take more than 24 months for its impact on the market to become apparent.
It’s worth mentioning that some companies that investors thought would be at risk have thrived. Take language learning software maker Duolingo (DUOL.US) as an example. Despite facing fierce competition from AI start-ups, the company’s stock price has risen by more than 50% this year. The company’s embrace of AI has helped reduce costs, and its expansion into other disciplines such as mathematics and music is attracting new customers.
The stock prices of Internet service companies that were thought to be potential losers under the AI wave, such as GoDaddy (GDDY.US) and Wix.com (WIX.US), have soared. Since the beginning of this year, GoDaddy and Wix.com have risen by 93% and 80% respectively. The share price of Pearson (PSO.US), an education company that was earlier seen as being hit hard by ChatGPT, hit a new high since 2015 this month.
Of course, many other companies have performed poorly. Since the end of 2022, a basket of stocks of Goldman Sachs that are considered to face increased AI risks has risen by 21%, underperforming the 55% increase of the S&P 500 Index during the same period.
The disconnect between people’s expectations of AI and the actual situation highlights the uncertainty of this technology and the difficulty in predicting how it will shape the market and the economy. Although tech giants such as Microsoft (MSFT.US) continue to invest heavily in AI, AI services have not yet been widely adopted, and it is taking longer than many people expected to generate AI-related revenue.
Certainly, some companies have clearly been hurt by artificial intelligence. The market capitalization of online education company Chegg (CHGG.US) has shrunk by more than 90% since the end of 2022. The company’s revenue contraction has accelerated in the past two quarters, and the management blamed the adverse factors brought by generative AI services for this. Jefferies analyst Brent Thill pointed out in a research report that Chegg is under a “major threat” from AI. Among the 12 analysts tracking Chegg surveyed by the media, none recommended buying the stock.
In addition, the share price of online review site Yelp (YELP.US) has fallen by 20% since the beginning of this year. Although Yelp has announced a cooperation with Perplexity AI, analysts have warned that AI may pose a risk to its long-term growth.
Kevin Mahn, the chief investment officer of Hennion & Walsh Asset Management, said, “It’s too early to label any company as a loser now, but in the long run, the real losers will be those that start investing too late and have to struggle to catch up.”
For stock pickers, risk is of the utmost importance. Michael Bailey, the director of research at Fulton Breakefield Broenniman LLC, said that the company sold its shares of Accenture (ACN.US) in October because they believed that as more and more companies seek to automate work tasks, AI will have a net negative impact on Accenture’s IT outsourcing and consulting business.
However, Accenture raised its revenue forecast for fiscal year 2025 last week and pointed out that there is strong customer demand for its generative AI services, which drove the stock to rebound last Thursday. In response, Michael Bailey said that the financial report shows that Accenture has received some boost from its AI business, but its performance may still be relatively poor.
David Kotok, the chief investment officer of Cumberland Advisors, said that in the absence of a clear view of who the long-term winners and losers will be, it is wise to maintain a diversified investment and should favor large companies that have the funds needed for costly AI investments. David Kotok said, “The AI wave will only go further, so the gap between rich and poor companies will only widen.” “We will eventually have some losers, but I don’t know. I’m surprised that we haven’t seen many yet. It may take a few years before we know.”