Reuters- Retail investors are investing in small-cap firms that employ artificial intelligence amid increasing competition between tech titans Google parent Alphabet and Microsoft to secure leadership in the next big driver of growth.
The success of ChatGPT has led to the spotlight on AI on Wall Street, similar to the hype from a few years ago when shares of companies remotely associated with the technology surged.
On Monday, the C3 software firm, C 3, was the fifth most actively traded on Fidelity's platform for small investors while drawing record daily retail inflows worth $31.4 million, according to Vanda Research.
Matthew Tuttle, chief executive officer of Tuttle Capital Management, said that small-cap firms have AI as a much larger part of their business than the larger ones.
Tuttle said he had shorted C 3. ai shares about a week ago, but was looking to switch to the long side because that's where the action is. SoundHound AI, a voice AI platform services company, and Thailand's security firm Guardforce AI have more than doubled this year, while analytics firm BigBear.ai has gained nine-fold in value, as well as more than doubled in value.
Arthur Hogan, chief market strategist at B.Riley Wealth said that investors were looking for the potential winners in the growing caldron of AI adjacent companies because of the new and exciting AI arms race.
The shares of Microsoft, which backs ChatGPT parent OpenAI, gained 1.5% in premarket trading ahead of the AI launch later in the day.
Alphabet Inc. is set to launch a chatbot service Bard and add more artificial intelligence to its search engine as well as developers, according to a statement by Google-owner Alphabet Inc.
The combination of its close partnership with OpenAI and its Azure capabilities around computation and data is a strong position in the AI race, according to Barclays analyst Raimo Lenschow.
U.S. shares of Baidu Inc went up by nearly 15% on Tuesday after the Chinese search engine said it would complete internal testing of a ChatGPT-style project called Ernie Bot in March. A clutch of Chinese AI stocks had rallied earlier in the day.
There will be winners and losers in the markets current new thing AI, but it will take some time to ascertain how all these artificial intelligence focused companies plan to monetize this exciting new technology, Hogan said.