Reflections on ChatGPT. Revolutionary AI technology?

ChatGPT is an impressive technology that has fascinated many people; there are even opinions that it may become the new Internet or even end the era of the Google search engine. We are looking at ChatGPT to see if it could pose a real threat to Google, given that Google-owned DeepMind is already preparing its own response to ChatGPT.

What is ChatGPT and why has it become so popular?

Microsoft recently invested $10 billion in OpenAI, the company behind the critically acclaimed ChatGPT solution, and is ready to incorporate the technology into a number of its products. Before answering the question of whether developed by OpenAI Chat GPT may be the end of Google as we know it, a few things need to be clarified about ChatGPT.

Producing a chatbot capable of answering questions asked by people - and artificial intelligence (AI) technology is already integrated in many different applications - is by no means a revolutionary change; so what made ChatGPT so popular in such a short time? Is it one of the first AI technologiesthat is easy to understand and with which the general public is able to interact. The difference from other chatbots is ChatGPT's ability to respond using language that is hardly distinguishable from chatting with a live human. In addition, ChatGPT learns from a much larger dataset using enormous computing power, which makes it much more advanced than other chatbots. Offering such a service to the general public, however, requires certain costs, which may also be one of the reasons why some of the earlier chatbots were never presented to the public. The cost of running ChatGPT is estimated at around $100 per day, and each word generated by ChatGPT is $000, so it's not a cheap venture.

Will ChatGPT be the end of Google Search?

Will ChatGPT replace Google - or even the entire Internet, as Microsoft's CEO announced during the teleconference on the publication of Q2022 XNUMX earnings? ChatGPT is a machine learning model trained to generate text based on specific inputs, while Google is a search engine designed to find information on the Internet based on link relationships between web pages. While Google is able to look up information that has been published recently, ChatGPT needs to be retrained based on new data containing this information, which can be a computationally challenging process. This is illustrated by our interaction with the current version of ChatGPT, clearly showing input limitations:

Interaction with ChatGPT on January 25, 2023. Our statement above, response below.

And a similar query using Google:

What Google can do and what ChatGPT can't/do:

• Google provides search results based on real-time data
• Google finds many answers that are relatively easy to navigate
• Google clearly cites the source, although neither Google nor ChatGPT offer any validation of the response content
• Google Search is extremely fast and cheap compared to ChatGPT

DeepMind takes up the gauntlet thrown by ChatGPT

DeepMind – a subsidiary A (Google's parent company) - works on artificial intelligence technology and is one of the leading research groups in this field. The Alphabet/Google concern was most likely very frustrated with the fact that it was overtaken by OpenAI and ChatGPT and requested DeepMind to allocate adequate resources to develop its own version of such technology. DeepMind recently announced that its response to ChatGPT under the name Sparrow, in a "private beta", could be launched as early as 2023. Sparrow is expected to offer greater factual accuracy as well as the ability to cite specific sources of information.

ChatGPT has indeed revolutionized many types of information requests and other types of tasks, but it is highly doubtful that it will replace Google or usher in a new era of Internet development. The fact that the technology has not been patented and is being replicated by DeepMind, and perhaps also by China's Baidu, indicates that ChatGPT has managed to solve the engineering problems behind the technology despite its impressive achievements. However, if other technology companies can create their own versions of this solution, its business value is no longer unique. In each case, Microsoft spent less than 1% on the possibility of developing AI technology.

Alphabet's share price fell 44% from high to low, but in the new year, the stock moved up 12% in line with the rest of the tech sector. ChatGPT and the narrative that it is the business end of Google search had a short-lived but significant impact on investor sentiment. In our opinion, however, this threat is overestimated, and Google search will continue to grow in business in the coming years. Alphabet is valued at a 6% return on free cash flow, a value that has been observed since the financial crisis and underlines the low expectations for the share price.

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About the Author

Peter potter - director of equity markets strategy in Saxo Bank. Develops investment strategies and analyzes of the stock market as well as individual companies, using statistical methods and models. Garnry creates Alpha Picks for Saxo Bank, a monthly magazine in which the most attractive companies in the US, Europe and Asia are selected. It also contributes to Saxo Bank's quarterly and annual forecasts "Shocking forecasts". He regularly gives comments on television, including CNBC and Bloomberg TV.