With the rise of artificial intelligence, industries across the board have started to ponder the ramifications of generative AI development. However, while some view AI as the next significant shift, others see it as a potential threat to their livelihood. One example of this is the recent announcement by Chegg Inc. that its homework-help services are affected by the ChatGPT tool.
Chegg Inc., the online guidance platform for students, saw a decline in shares by as much as 38% after warning that the growth of its homework-help services is threatened by the ChatGPT tool. This is one of the most significant market reactions reflecting generative AI’s impact in upending industries.
Chegg’s primary source of revenue comes from subscriptions, which start at $15.95 a month. However, the company fears the AI chatbot tool may become an alternative to paying for the service. Chief Executive Officer Dan Rosensweig confirmed that the impact of ChatGPT, an OpenAI tool, started to be felt this spring, leading to a significant spike in student interest.
As a result, the company has slashed its forecasts, assuming that Chegg subscribers will move materially lower.
The rise of generative AI has been a concern for industries from banking to media and education since OpenAI introduced ChatGPT publicly in November. However, while investors have been chasing stocks that are working on similar models, it is rare for CEOs to attribute their company’s underperformance to AI, followed by a significant selloff.
Rosensweig vowed to embrace AI “aggressively and immediately” despite its current threat to the company’s growth.
As AI technology continues to advance, industries will likely continue to face disruptions and challenges. It remains to be seen how companies worldwide will adapt to the changing landscape, but one thing is sure: AI is here to stay and will continue to shape the future of work and business.