CHAT GPT Gouges Education Stocks
ChatGPT is capable of producing human-quality text after receiving brief instructions
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Education stocks sold off last week after Chegg Inc., which publishes textbooks, study guides, and other learning materials, warned that the surge of students’ interest in the ChatGPT artificial intelligence (AI) was hurting sales and “having an impact on our customer growth rate,” CEO Dan Rosensweig said in a call with analysts.
ChatGPT is capable of producing human-quality text after receiving brief instructions.
Chegg’s share price fell by half after it reported a 7-percent slide in first-quarter earnings and the loss of 5 percent of its subscribers. The company withdrew its guidance on future financial performance.
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Pearson+, one of the world’s largest textbook publishers, saw its stock lose 15 percent of its value in the wake of Chegg’s announcement. Shares of Duolingo, an online site teaching foreign languages, declined by 10 percent.
Chegg is one of the first companies to acknowledge that artificial intelligence is a threat to its business, the Financial Times noted.
ChatGPT can replicate the study help Chegg offers, according to Citigroup analyst Tom Singlehurst. The service can give college students ready-made answers to test questions, a service that had prompted colleges to accuse Chegg of enabling students to cheat.
Rosensweig takes offense at the claim, saying his company’s materials give disadvantaged students needed support they otherwise would lack.
Now Chegg is “embracing AI aggressively and prioritizing our investments to meet this opportunity,” Rosensweig added, saying that AI eventually will “advantage Chegg.”
AI is not a threat to Pearson+, CEO Andy Bird said, adding that Chegg is a “fundamentally different business” and that adding AI to Pearson’s line of products is an enticing opportunity.
Singlehurst agreed that ChatGPT is only a “second-order threat” to Pearson+.
“The output of these generative AI models is largely predicted by the quality of the data sets that are put into them,” Bird said. “We are the owners of some very rich, pure data sets. When you input them into generative AI models, you get better outputs.”
TRENDPOST: Chegg’s stock tumble is the financial canary in the equity market’s coal mine: artificial intelligence (AI) will destroy the value of some companies but enrich others.
However, for the foreseeable future, we will be unable to tell which is which because business is just now beginning to understand the implications of AI and to figure out how to respond to the opportunity or threat.
IBM has announced it will no longer hire humans to do jobs that AI can do. That has implications across the workforce, from finance to education to engineering social services and medical care.