ChatGPT craze inflates Chinese AI tech stocks

SHANGHAI (Reuters) – China’s AI stocks are the latest fad in mainland markets as the global frenzy around the Microsoft-backed ChatGPT chatbot spurs speculative bets on the breakthrough computer technology.

Just two months after its launch, ChatGPT β€” which can generate articles, essays, jokes, and even poetry in response to suggestions β€” has been ranked the fastest growing consumer app in history. This prompted Google’s owner, Alphabet Inc, to plan its own chatbot service and use more artificial intelligence for its search engine.

Although ChatGPT is not accessible in China, investors in mainland China are still picking up shares in AI technology companies such as Hanwang Technology Co, TRS Information Technology Co, and Cloudwalk Technology Co.

The CSI AI Industry Index, which includes larger-cap companies like iFlytek Co, is up about 17% this year, outpacing the benchmark CSI300 Index’s 6% increase.

Truth be told, there is no indication that these AI companies are close to launching a product similar to ChatGPT. The closest appears to be search engine giant Baidu Inc, with plans to complete testing of its “Ernie bot” in March. Its shares jumped more than 13% on Tuesday after making the announcement.

“The industry as a whole tends to speculate on expectations first before trading on actual results later,” said Zhang Kexing, general manager of Beijing Gelei Asset Management.

Shares of Hanwang Technology, which makes products that enable smart interactions, jumped by its daily limit of 10% for the seven sessions following the reopening of markets after the Lunar New Year holiday, boosting prices more than 60% so far in February .

The company expects to report an annual loss for 2022, but believes it has an advantage over an interface like ChatGPT because its model can produce more accurate results for customers.

Shares of Cloudwalk more than doubled in the seven trading days following the Lunar New Year holiday. On Tuesday, the company warned investors, saying its losses worsened in 2022, has not partnered with OpenAI, and has not generated revenue from ChatGPT-related services and products.

Other companies that have revealed their advances in AI technology include TRS Information Technology and Beijing Haitian Ruisheng Science Technology Ltd. Their stock prices have also soared.

The price hike has stretched valuations. TRS, for example, trades at nearly 60 times earnings, while Huisheng’s P/E ratio is over 240.

Retail investor Lu Deyong has bought shares of TRS and iFlytek and is looking to profit from the ChatGPT hype.

“ChatGPT is just a cool idea,” he said. However, he doesn’t think “China can make such a technology in the near term.”

β€œFor us retail investors, we prefer smaller stocks with this quick-money-making concept,” Lu said.

(Reporting by Samuel Shen, Jason Xue and Brenda Goh; Editing by Vidya Ranganathan and Christian Schmollinger)

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