Since the launch of ChatGPT, talk of artificial intelligence dominated Wall Street.
OpenAI's chatbot has unleashed a world of possibilities, and Microsoft and Alphabet (GOOG 1.25%) (GOOGL 1.27%) are already racing to define the next iteration of search, which will be powered by, or at least assisted by, AI chatbots.
However, not everyone is happy about this development.
The Future of Life Institute issued an open letter calling for AI labs to pause all development of technologies beyond GPT-4 for at least six months, arguing that regulatory frameworks need to improve in order to mitigate the risks from this new technology.
The letter attracted signatures from a number of tech leaders including Elon Musk and Apple (AAPL 0.64%) co-founder Steve Wozniak, showing it deserves to be taken seriously. Though it doesn't seem likely at this point that there will be an AI pause, it's worth considering which stocks would benefit if it happened. Let's take a look at three stocks that would respond favorably to a break in AI advances.
Image source: Getty Images.
1. Alphabet
No company has been more threatened by ChatGPT than Alphabet. The Google parent declared a "code red" shortly after its release, and founders Larry Page and Sergey Brin came back to devise the company's AI strategy, as it was clear that the new technology posed a threat to Google Search.
Alphabet unveiled Bard AI, its answer to ChatGPT, in February, but the company's earlier decisions indicate a reluctance to innovate beyond the current version of Google Search, which is a massive profit machine for the company.
In February, Microsoft introduced a new ChatGPT-powered version of Bing, and CEO Satya Nadella declared a new race in search and AI.
Given the high stakes in this new competition and the fact that Alphabet is playing catch-up, the search leader seems like it would be a clear beneficiary from an AI pause. It would give it an opportunity to reset its strategy and protect its lead in search.
2. Baidu
There are a number of reasons why a pause in AI would be problematic, but one is that there's no way to enforce it. It would be voluntary, and it seems unlikely that Chinese companies would go along with it. The U.S. and China are involved in something of a tech Cold War on multiple fronts, and the Biden administration has restricted semiconductor equipment and technology that can be exported to China.
Baidu (BIDU 1.02%) is one of the most advanced Chinese companies when it comes to AI. The company has a network of self-driving cars in a number of cities in China, and has also launched its own AI chatbot, Erniebot.
Investors were initially disappointed with Erniebot's capabilities at its release last month, but an AI pause would give the company time to improve Erniebot to better compete with ChatGPT and other U.S.-based competitors.
3. Apple
Apple has been mostly left out of the dialogue around ChatGPT. As a device maker, Apple isn't at risk the way a company like Alphabet is. But it also doesn't want to get left behind by the next major computing platform, and there are plenty of opportunities for it to use AI to its advantage.
For example, Apple was early with its voice assistant Siri, but overall Siri has fallen short of investor hopes. A version of Siri powered by GPT technology, on the other hand, could be transformative for iPhone users.
Apple also benefits from Google's dominance of search, as Alphabet pays Apple dearly to be the default search engine on Safari, Apple's browser. According to some estimates, Alphabet paid Apple $20 billion for that privilege last year. An AI pause would help protect that payment for the meantime, and give Alphabet time to ensure that it remains the leader in search.
Overall, Apple's strategy in AI is still unclear, and one news report said that the company was reevaluating its AI strategy in the wake of the ChatGPT launch. A pause of six months or longer could help the iPhone maker build the momentum it needs to be a leader in AI.
