ChatGPT and AI Investing in 2023

Schools, colleges, corporate boardrooms, and even family dinners are all abuzz with the common topic of conversation: ChatGPT. It would still be an understatement to say that it has taken the world by storm.

The easily accessible chatbot signed up 1 million users in five days and amassed 100 million monthly active users only two months into its launch.

To put this in context, TikTok, the erstwhile fastest-growing app, took nine months to reach 100 million users.

Daily Visits OpenAI


Many users feel that ChatGPT may eventually have the power to disrupt how humans interact with computers and change how information is retrieved. To make things more interesting, its creator, which has launched the chatbot to demonstrate what it is capable of, is just getting started.

We delve deeper to find out what the hype is all about and how investors and traders may stand to benefit from it.

What Is ChatGPT?

In its own description, ChatGPT is “an AI-powered chatbot developed by OpenAI, based on the GPT (Generative Pretrained Transformer) language model. It uses deep learning techniques to generate human-like responses to text inputs in a conversational manner.”

As evident from its own introduction, ChatGPT is a long-form question-answering tool that can produce (surprisingly) human-like responses to user requests. It was developed by San Francisco-based startup OpenAI, which was co-founded in 2015 by Elon Musk and Sam Altman. The startup is well-funded by major investors (more on that later).

What does ChatGPT do?

The chatbot has been programmed to understand human language, curate relevant content from the library of information on which it has been trained, and generate (mostly) appropriate responses to valid questions asked by its user.

As a result, its uses (and abuses) are vast and diverse. The content it can create ranges from poems composed to mirror the style of a poet, written instructions on how to perform a specific task, e-mails, quizzes, listicles, and the list goes on.

ChatGPT has even been used to write reports on popular books and other essay-style assignments for high school and college students.

In one instance, the chatbot has even passed an MBA exam given by a Wharton professor.

As students in classrooms have used ChatGPT to generate entire essays and hackers have begun testing it to create malware, concerns regarding its potential misuse and ethical boundaries have been gathering momentum.

Why is the technology behind ChatGPT important?

ChatGPT is one of the several use cases of generative AI, the subset of algorithms that creates and returns content, such as human-like text, images, and videos, based on the user's written instructions (prompts).

Prior examples include Dall-E, a text-to-image program from OpenAI that gained recognition for its ability to come up with realistic, often absurd, pictures that match text descriptions provided to it.

ChatGPT is powered by a large language model or LLM. This gives the application the ability to understand human language and provide responses based on the large body of information on which the model has been trained.

Of late, LLMs have been used in autocomplete kind of applications to predict the next word in a series of words in a sentence. However, GPT-3.5, the LLM behind ChatGPT, enables it to take the quantum leap by predicting the next sentence. This allows the program to write paragraphs and entire pages of content.

GPT-3.5 is an upgrade of OpenAI’s GPT-3 language model, which has 175 billion parameters and was trained on 570 gigabytes of text, more than 100 times the 1.5 billion parameters that were used to train its predecessor, GPT-2.

This gargantuan upscaling of input has completely revolutionized its behavior. GPT-3 is able to perform tasks on which it has received little to no explicit training, at times even better than its specifically-trained counterparts.

Moreover, its transformer-based architecture allows it to process large amounts of data in parallel. This differentiates ChatGPT by giving it the ability to draw upon users’ earlier message in the thread and use it in a different context to form responses later in the conversation.

As lines between human and artificial intellectual capacities blur with the upcoming iterations of GPT and humankind’s pursuit of Artificial General Intelligence, in the foreseeable future (if it’s not already here), it might be impossible to discern whether such an article was composed with or without human intervention.

What is AI investing?

Artificial Intelligence (AI) is an umbrella term used to denote a series of programs and algorithms designed to mimic human intelligence and perform cognitive tasks efficiently with little-to-no human intervention.

Reinforcement through Machine Learning (ML) changes the game by enabling the models and algorithms to keep evolving to improve based on outcomes.

Unlike bubbles that usually tend to mushroom around obscure delusions, such as tulips and crypto, AI is a general-purpose technology that has already touched and improved all facets of our life.

With the potential to be as revolutionary as the steam engine and electricity, AI already influences how we shop, drive, date, entertain ourselves, manage our finances, take care of our health, and much more.

Given its massive importance, it’s hardly surprising that Zion Market Research forecasts the global AI industry to grow to $422.37 billion by 2028. Hence, this field has understandably garnered massive attention from investors who are reluctant to miss the bus on such a watershed development in the history of humankind.

Although OpenAI, the creator of ChatGPT, is not a publicly listed company, Microsoft Corporation (MSFT) is betting big on the company with the announcement of a multiyear, multibillion-dollar investment deal.

At the World Economic Forum held in Davos this year, CEO Satya Nadella discussed how the underlying technology would eventually be ubiquitous across MSFT’s products. The process has already begun with updates to its Bing search engine.

MSFT’s rival, Alphabet Inc. (GOOGL), is in hot pursuit. With AI-enabled technology ubiquitous across its platforms, the company has unveiled its own response to ChatGPT, called BardAI, with which the company is eager to reclaim its reputation as an early bird in the domain of conversational AI.

Chinese tech giant Baidu, Inc. (BIDU) has also followed suit with Ernie Bot., Inc. (AMZN) and Meta Platforms, Inc. (META) are also among the notable players in this dynamic domain.

What's Next for AI investing?

Remember, the markets move fast and things may quickly change for these stocks. Our MarketClub members have access to entry and exit signals so they'll know when the trend starts to reverse.

Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for over 350K stocks, futures, ETFs, forex pairs and mutual funds.

Start Your MarketClub Trial

The MarketClub Team