Market: ChatGPT or the cumbersome guest of the stock market results season

(BFM Bourse) – The rise of the chatbot has begun to claim its first victims on the stock market, casting doubt on the activity of several sectors. To the point that several listed companies have tried to reassure.

ChatGPT, great kingmaker on the stock market. Launched last fall, the conversational robot of the American company OpenAI experienced a resounding boom and caused a stock market frenzy on certain titles, in particular Nvidia. Boosted by the acceleration of generative AI, the technology at the heart of ChatGPT, synonymous with increased demand for its products, the American group gained more than 24% on Thursday after delivering breathtaking prospects for the second quarter. This brought its increase over the whole of 2023 to 160%.

But the emergence of generational AI also raises questions about the business model of many sectors and listed companies. The question of the impact of this form of artificial intelligence thus came up in several conferences and company presentations during the results season which has just ended.

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To the point of making victims. The Californian company Chegg, hitherto little known outside the United States, thus made the headlines of the stock market news after seeing its share price unscrew precisely because of ChatGPT. This online tutoring company said when releasing its quarterly results that its growth rate of new customers was being penalized by the increased interest of students in the chatbot. The stock price nearly halved and hasn’t gained much since.

Chegg is not alone. Its profit warning had collateral effects on the British publishing giant (7.5 billion pounds of capitalization) Pearson, with a plunge of almost 15% on the day of the announcement of the American company. So much so that, as Credit Suisse points out, the company from across the Channel held a conference a week later to reassure investors. The price has since regained some of its losses.

Towards more creation for advertisers?

Questions also surrounded the advertising groups. During his conference with analysts on the occasion of his quarterly sales, the chairman of the management board of Publicis, Arthur Sadoun, from the first round of questions – that of the analyst from Exane BNP Paribas – had to answer them. The manager then assured that generative artificial intelligence was already “at the heart of the operational model” of Publicis, affirming that its creative agencies will have “the capacity” to draw the full potential of this form of AI. But this transformation “will take time to become a reality”, he added.

Arthur Sadoun summarized the potential evolution as follows: “it is possible that we will be paid less for a single advertising campaign, but we will be able to register more volumes insofar as [le besoin de] personalization increases”. “So we perceive generative AI, as long as we master it, more as an opportunity than a threat”, he concluded. In 2018, Publicis developed Marcel, an artificial intelligence platform, in partnership with Microsoft, and signed a partnership with OpenAI last year.

In a recent note, TP ICAP Midcap judged that “AI will force media agencies to bring more and more less artificial intelligence, the emotion that artificial intelligence lacks then illustrating their barrier to entry”, which will allow creation to emerge as “a differentiating factor”. The design office believes that Publicis will be able to take the right turn. “In our view, the group should not fail to fully but intelligently integrate AI into its solutions, which will bring significant productivity gains and open up new possibilities,” he wrote.

In a note at the end of April, Societe Generale judged more broadly that investors underestimated the ability of advertising agencies to adapt their business models.

Obviously, WPP and Omnicom, the great rivals of Publicis also intend to win the race for generative AI. John Wren, CEO of Omnicom, said he intended to “grasp the body as quickly as possible” the possibilities offered by this type of artificial intelligence. His counterpart at WPP had said that these technologies were already “fundamental” in the activity of his company.

Teleperformance and “TP GPT”

Teleperformance for its part dedicated an entire part of its presentation, when publishing its quarterly turnover, to generative AI, also presenting it as an opportunity. The specialist in outsourced customer relations has also developed its own product “TP GPT” which integrates the technologies of OpenAI, the company behind ChatGPT. The company considers that 20% to 30% of its volumes could be automated in the next three years and stressed that AI could “optimize its operations”. Teleperformance gave as an example a telephone call whose length was reduced by 39% thanks to these technologies.

Morgan Stanley, however, judged that with these technologies “the composition of the business will change and, at this stage, the likely result seems to be slightly lower growth with a higher margin”. The Stifel bank, for its part, stressed that the uncertainties about generative AI were likely to weigh on investor sentiment on the stock, while waiting for more visibility on its impact.

When ChatGPT gives its opinion on the impact of… ChatGPT

Another example: Capgemini. The market does not seem to have outright concerns about the impact of ChatGPT on the business model of the digital services company (ESN). But its general manager. Aiman ​​Ezzat also had to answer, during the conference call following the publication of his first quarter sales, a question on the rise of generative AI and its impact, particularly in terms of pressure on price. “Our goal is to turn any new technology into a revenue stream” and “we have already done a lot of work in terms of generative AI projects even before ChatGPT became popular”, he replied.

Seeing this emergence as “an opportunity”, the leader stressed that generative AI should help fight the “talent shortage”, which is hitting the sector, by improving productivity in several areas, even if this will not happen ” overnight”. This will, of course, be integrated into the group’s “pricing”, but, for all that, margins will continue to increase thanks to the positive impact on productivity, he concluded.

Funny thing, at TP ICAP Midcap, the analyst in charge of Aubay, a mid-cap French ESN (600 million euros), directly asked ChatGPT itself if ChatGPT was going to “kill ESN activity” .

Selected chunks of the answer: “although language models like ChatGPT can automate some basic tasks or provide general information, they cannot replace human expertise, contextual understanding and personalized services provided by service companies digital”.

“These companies have a competitive advantage by offering solutions adapted to the specific needs of their customers, by providing specialized technical support and by adapting to technological developments”, continued the conversational robot.

Julien Marion – ©2023 BFM Bourse

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