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HomeMarketChatGPT and AI Stocks Are Red Hot. It's Time for Caution.

ChatGPT and AI Stocks Are Red Hot. It’s Time for Caution.

Hype over artificial intelligence has gripped Wall Street, sending AI-linked stocks skyward.

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Nikolai Sorokin/Dreamstime

The two-sided artificial intelligence frenzy sparked by ChatGPT shows few signs of stopping, with investors bidding up AI-linked stocks just about as fast as major companies announce products that take advantage of the technology.

While AI is an attractive area for growth and offers genuine use cases—more than can be said of some high-growth plays, like in crypto—the way it’s being discussed is getting a bit hyperbolic.

“ChatGPT is to consumer tech what the Beatles were to music,” analysts at Bespoke Investment Group wrote in a Tuesday note that went on to cast doubt on the immediate benefits for companies in the new business. “It will leave a permanent impact on society in terms of how people gather, produce, and consume information and who knows what else.”

Wall Street just can’t let it be with the AI rhetoric, which largely began with the high-profile launch of
-backed (ticker: MSFT) OpenAI’s chatbot late last year. ChatGPT captured public attention and swiftly racked up enough active users to make it one of the fastest-growing consumer tech stories in history.

said it would use ChatGPT’s technology to beef up Bing, its search engine, aiming to recreate competition there. Google’s parent
(GOOGL), as well as Chinese tech companies
(BABA) and
(BIDU), have all announced their own AI-powered chatbots.

Meanwhile, investors continue to buy up large and small AI names alike.
stock hit an 11-month high after the company’s chatbot announcement, and shares of
(AI) have soared 150% so far this year. Even the crypto crowd is even following suit in their own way, buying up small tokens with links to artificial intelligence.

It’s tough to see through the haze, especially since such outsize stock moves cloud sober analysis of the real growth potential AI holds.

“Chat AI tools may be changing the world and there will be big winners, but the ones with the most immediate and direct exposure haven’t seen a big change in their fortunes,” noted the team at Bespoke, striking a tone closer to “I Feel Fine” than “Here Comes the Sun.” “Maybe the fact that ‘everyone’ seems to be launching their own versions of these tools suggests that they don’t have a lot of scarcity value after all.”

Nevertheless, AI does remain an opportunity—but investors who feel like they need a ticket to ride should take a conservative approach and try not to get caught up in an echo chamber of hype around specific names.

“Investors seeking AI exposure should consider a diversified group of incumbents and disruptors, rather than focusing on any single stock,” a team led by Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a Wednesday note. “We anticipate this rapid arms race for AI adoption within tech may act as a surprise tailwind for global semiconductor demand, and that investors in the Asia value chain in particular should be tactically nimble in anticipation of a coming turn in the cycle.”

And that’s how AI might make its way across the universe.

Write to Jack Denton at


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