In just a few months, ChatGPT, the disruptive AI chatbot made by OpenAI, has taken the world by storm.
The technology has wowed everyone from CEOs to technologists to ordinary users, performing a range of activities like writing poetry and code or explaining complex subjects in neatly packaged paragraphs. It's also passed high-level exams for law school, medical licensing, and MBA programs.
Using a simple chat interface, ChatGPT, which stands for Chat Generative Pre-Trained Transformer, is able to answer questions directly and is as easy to use as Google Search. The free AI chat interface signed up 100 million users in just two months after its launch on Nov. 30, 2022, and has the potential to disrupt industries from internet search to content creation.
In this article, we'll discuss the implications for ChatGPT and robot chat more generally, how you can get exposure to it as an investor, and whether you should invest in ChatGPT.
How to invest in ChatGPT
How to invest in ChatGPT
ChatGPT isn't publicly traded, and OpenAI, the company that built it, isn't either. However, there are a number of ways to get exposure to ChatGPT.
The most direct one is through Microsoft (MSFT 0.59%). Microsoft has had a strategic partnership with OpenAI since 2019 and has invested billions of dollars into the AI start-up over its history. After ChatGPT was unveiled in early 2023, Microsoft invested $10 billion into OpenAI, showing both the company's confidence in OpenAI's potential and its belief that artificial intelligence is the next major computing platform.
Another way to get exposure to ChatGPT is through Nvidia (NVDA 0.43%). Nvidia is one of the world's most valuable semiconductor companies and the leading producer of graphics processing units. Its GPUs are often used for artificial intelligence purposes, training large language models like ChatGPT and processing large amounts of data. They are a key component in many machine learning models.
Artificial Intelligence
Finally, Perion Network (PERI -1.26%) is another potential winner from the ChatGPT rollout. Perion is a small-cap ad tech stock, but it has a strategic partnership with Microsoft's Bing search engine, and Microsoft has rolled out a new version of Bing powered by ChatGPT. If Bing gains market share on Google with the help of ChatGPT, Perion is likely to be a big winner.
| Name | Ticker | Market Cap | Description |
|---|---|---|---|
| Microsoft | (NASDAQ:MSFT) | $2.44 trillion | Diversified global tech giant. |
| Nvidia | (NASDAQ:NVDA) | $1.09 trillion | Leading maker of a graphics chips. |
| Perion Network | (NASDAQ:PERI) | $1.53 billion | A small-cap ad tech company. |
1. Microsoft
1. Microsoft
Microsoft is best known as a diversified global tech giant. It makes money from a wide range of products, including its Windows operating system, Azure cloud infrastructure service, subscription software products like its Office software suite, hardware like Surface, gaming products under Xbox, and the LinkedIn professional social network.
However, more recently, Microsoft has been getting attention for its strategic partnership with OpenAI. The company has bet big on OpenAI and ChatGPT. Microsoft CEO Satya Nadella has called AI the next major computing platform and has already leveraged the power of ChatGPT and OpenAI's tools in a number of products, including Azure.
Microsoft's biggest bet with ChatGPT is on Bing. Nadella has said that a new search engine race is happening. He's also eager to take the fight to Alphabet's Google (GOOGL -0.09%)(GOOG -0.03%). Nadella views the landscape in search as asymmetric, with Alphabet unable to afford to lose market share in search and any gain being a win for Bing.
If you're looking for the company that's most closely connected with OpenAI and ChatGPT, Microsoft is your best choice. However, the company is so big that only a small amount of the business is exposed to ChatGPT.
2. Nvidia
2. Nvidia
Nvidia stock has taken off over the last decade as its graphics processing chips have become a vital part of everything from gaming to self-driving cars to artificial intelligence.
AI comes with extraordinary computing demands, and Nvidia's chips are able to handle the workload better than its competitors. Demand for its chips is already soaring as the company sells the building blocks for AI platforms.
For example, UBS (UBS -1.02%) estimates that 10,000 Nvidia graphics processing units were used to train ChatGPT, and some analysts estimate that 30,000 of its GPUs are now being used to run OpenAI's chatbot.
Nvidia has also teamed up with Microsoft to build a massive cloud AI computer using tens of thousands of Nvidia GPUs and other Nvidia AI software tools.
Given Nvidia's strength in AI computing power, including products like the Omniverse, Nvidia looks like a good AI stock to own if you're looking for an investment poised to make gains from the growth in artificial intelligence.
3. Perion Network
3. Perion Network
Another way to get exposure to ChatGPT is through Perion Network (PERI -1.26%), a small-cap ad tech firm. Perion is best known for its intelligent hub, which connects advertisers and publishers to optimize ad placement and inventory for both parties.
However, the company also brings in almost half of its revenue through search, largely through its partnership with Bing. Perion is one of the ad tech companies the Microsoft search engine uses to help optimize ads and conversions. Perion gets revenue share through Bing when a user clicks on an ad that leads to a sale.
In its recent earnings presentation, Perion shared a quote from Microsoft CFO Amy Hood, who said that each additional percentage of market share that Bing gets translates to almost $2 billion in annual revenue, meaning that it wouldn't take much to move the needle for Perion.
Considering the stock is trading at a price-to-earnings ratio of 14, the stock could soar if the new Bing begins to gain traction.
Related investing topics
Should you invest?
Should you invest in ChatGPT?
ChatGPT and generative AI have the potential to change everything from the way we work to the way we learn and are entertained.
It's still very early for ChatGPT and the next iteration of AI. Some are even asking if ChatGPT is safe to use since the product is new and has only just started to be monetized. Additionally, the hype around AI stocks sparked a surge at the beginning of 2023, leading shares of AI stocks like C3.ai (AI -1.82%) and anything else connected to artificial intelligence to soar. More recently, a number of those stocks have pulled back as the hype moderates.
However, for risk-seeking investors, it's not a bad idea to invest in some of these ChatGPT stocks. Microsoft seems like the most stable bet of the bunch. The company has a wide range of products to make use of the AI chatbot, and its partnership with OpenAI will help it benefit from future advances in generative AI technology.
Nvidia should also be a winner since it's likely to benefit from increased demand for computing power, and Perion Network stock has a lot of upside potential if the new Bing begins to catch on.
Although the tech stock crash in 2022 may have chastened investors, ChatGPT has crystallized the potential of AI and is likely to kick off a new race in artificial intelligence.
To hedge your bets, investing in all three of these stocks and holding them for the long term may be one of the best ways to get exposure to ChatGPT. You can also invest in an AI ETF for broad exposure to the sector.
Any new technology comes with risk for investors, but the upside potential of the new generative AI technology could be enormous.
ChatGPT FAQs
What company is investing in ChatGPT?
Microsoft has invested a total of $13 billion in ChatGPT creator OpenAI, including a $10 billion investment in the company shortly after the release of ChatGPT.
The two companies have a strategic partnership together.
How to invest in OpenAI?
You can't invest directly in OpenAI because it's not publicly traded. If you'd like to have some exposure to the ChatGPT parent, the best thing you can do is invest in Microsoft, which has a significant stake in OpenAI.
Who owns ChatGPT?
ChatGPT is owned by OpenAI, an AI-focused research company that is backed by Microsoft.
How can you invest in AI companies?
There are a number of different ways to invest in AI companies. Some of the most direct are to buy stock in companies closely connected to the AI revolution, like Microsoft or Nvidia.
You can also buy shares of an ETF, which will give you exposure to dozens of companies working with artificial intelligence.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Perion Network. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.
