Education stocks sold off last week after Chegg Inc., which publishes textbooks, study guides, and other learning materials, warned that the surge of students’ interest in the ChatGPT artificial intelligence (AI) was hurting sales and “having an impact on our customer growth rate,” CEO Dan Rosensweig said in a call with analysts.
ChatGPT is capable of producing human-quality text after receiving brief instructions.
Chegg’s share price fell by half after it reported a 7-percent slide in first-quarter earnings and the loss of 5 percent of its subscribers. The company withdrew its guidance on future financial performance.
Pearson+, one of the world’s largest textbook publishers, saw its stock lose 15 percent of its value in the wake of Chegg’s announcement. Shares of Duolingo, an online site teaching foreign languages, declined by 10 percent.
Chegg is one of the first companies to acknowledge that artificial intelligence is a threat to its business, the Financial Times noted.
ChatGPT can replicate the study help Chegg offers, according to Citigroup analyst Tom Singlehurst. The service can give college students ready-made answers to test questions, a service that had prompted colleges to accuse Chegg of enabling students to cheat.
Rosensweig takes offense at the claim, saying his company’s materials give disadvantaged students needed support they otherwise would lack.
Now Chegg is “embracing AI aggressively and prioritizing our investments to meet this opportunity,” Rosensweig added, saying that AI eventually will “advantage Chegg.”
AI is not a threat to Pearson+, CEO Andy Bird said, adding that Chegg is a “fundamentally different business” and that adding AI to Pearson’s line of products is an enticing opportunity.
Singlehurst agreed that ChatGPT is only a “second-order threat” to Pearson+.
“The output of these generative AI models is largely predicted by the quality of the data sets that are put into them,” Bird said. “We are the owners of some very rich, pure data sets. When you input them into generative AI models, you get better outputs.”
TRENDPOST: Chegg’s stock tumble is the financial canary in the equity market’s coal mine: artificial intelligence (AI) will destroy the value of some companies but enrich others.
However, for the foreseeable future, we will be unable to tell which is which because business is just now beginning to understand the implications of AI and to figure out how to respond to the opportunity or threat.
IBM has announced it will no longer hire humans to do jobs that AI can do. That has implications across the workforce, from finance to education to engineering social services and medical care. (See “Dr. Chatbot Better Than Human Physicians – According to Human Health Care Professionals” in this issue.)
Film and television writers now on strike are demanding protections from AI be written into their contracts.
AI also poses nightmares for security specialists of both the cyber and military varieties.
No wonder that AI pioneer Geoffrey Hinton now warns of its darker implications. “It’s hard to see how you can prevent the bad actors from using it for bad things,” he told The New York Times.
The Future of Life Institute’s open letter calling for a pause in AI’s development until its implications can be mapped and adequate controls put in place has drawn almost 28,000 signatures, including those of Elon Musk, Apple co-founder Steve Wozniak, and Berkeley professor Stuart Russell, author of one of the standard textbooks on AI.
The European Union is formulating regulations around AI. U.S. vice president Kamala Harris said recently that the Biden administration supports the idea of some kind of regulation.
TREND FORECAST: AI’s development will not be paused while developers, ethicists, and politicians haggle over what to do with it. Technology has always run further faster than humans’ ability to deal with its impacts, largely because it makes life easier and corporations rich.
Regulation will play an endless game of catch-up, addressing the latest misstep, outrage, or catastrophe AI presents while AI itself runs rampant through society, transforming education, eliminating and reinventing jobs, and redefining what it means to be human.