Over the past few weeks, there has been a lot of hype surrounding AI products, particularly due to the advancements made by OpenAI's ChatGPT, Microsoft's new AI-powered Bing, and Google's relatively nascent Bard. This has also led to many other companies like Alibaba, Baidu, and Opera announcing that they are throwing their hats into the AI ring. Now, multiple Chinese groups and analysts are cautioning investors not to blindly put in money into AI stocks.
Multiple Chinese tech companies have reportedly issued guidance to indicate that they are not close to being profitable in more specialized fields of AI. Beijing Deep Glint Technology Co.'s shares fell by 10.2% immediately after this announcement while CloudWalk noted that it hasn't generated any revenue from ChatGPT products. Similarly, 360 Security Technology Inc. emphasized that there are numerous uncertainties around release dates and the nature of its upcoming AI products.
These announcements were made following shares for Chinese tech companies rising significantly due to the investor expectation that they will be rolling out ChatGPT-like AI products that will take the world by storm soon.
Instead, analysts and tech executives now cautioning investors not to blindly invest money into ChatGPT stocks. Vey-Sern Ling, managing director at Swiss wealth management firm Union Bancaire Privee stated that:
In most cases it’s not immediately clear what the financial benefits are,. Apart from the companies with the strongest technical capabilities, most of the rest are probably just riding the wave. Such hype-driven rallies are never sustainable.
Comparisons are also being drawn to the recent blockchain/NFT bubble that saw huge gains at the start before eventually flatlining in most application areas as many had been predicting. Chinese newspapers have also been publishing front-page commentary cautioning investors not to be drawn in by the hype.
Despite these warnings, stocks of AI companies in China have been on the rise. At least three companies on the local stock exchange saw their share prices rise more than 30% in three consecutive sessions. Only time will tell how many of China's AI companies will actually churn out profitable products.
Source: Bloomberg (paywall)
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