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The stock market hype machine has come for artificial intelligence

Yahoo Finance Live’s Julie Hyman breaks down the artificial intelligence hype that’s driving investment and tech stocks.

Video transcript

[AUDIO LOGO]

- Well, let's get to today's "Morning Brief" that's written by Julie herself this morning, and the focus here is artificial intelligence and this boom. If you're having trouble just keeping track of all of the recent AI chat bot announcements, you're not alone. The competition seems to have exploded almost overnight. Moves by smaller entrants, like Soundhound, BuzzFeed, all the way up to tech giants like Google, Baidu, IBM. As Julie points out, it seems investors are buying now and asking questions later. Julie, I'll toss things on over to you.

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- Yeah. That's what I wrote about in this "Morning Brief," and it was inspired by conversations that we've been having on set. We've been noticing all of the spikes in stocks that have anything to do with AI. And as I note in the "Morning Brief," it feels a little like 2017 when a lot of different companies were appending blockchain to their name, or saying they were doing things with the blockchain. The stocks would go crazy.

But obviously, that's a lot less popular now, and that really is mimicked many different hype cycles that we have seen. And it's not that blockchain doesn't exist anymore, it's just not as hyped as it was. So that is probably the pattern that we are going to see follow with artificial intelligence. Chat GPT really capturing public imagination with a sort of realistic artificial intelligence bot that one can interact with, and a lot of imagination that has sparked about what changes that can make.

So these are some of the stocks that we have seen affected by all of this. What I'm going to do is switch to a year-to-date look for many of these companies because a couple of them have caught my eye in particular. Chiefly among them, BigBear.AI. Now, what does this company do? Something with artificial intelligence. It serves the federal government. It serves the Department of Defense, Air Force contracts, and the like in its various artificial intelligence services.

Year-to-date, this stock is up 800%. It came public through a SPAC, and that happened back in 2021. It's down from then, but obviously has had a big climb this year. So that's just one example, right? You have other companies like C3.AI, which was founded by the software pioneer, Thomas Siebel. Those shares are more than doubled for the year-to-date. It just went public in about 2020.

Even something like a BuzzFeed, right? The obviously news and entertainment site said it was going to use an AI bot to make some of its lists, and this is what the stock did. So obviously, there's a lot of enthusiasm around this. Whether it's warranted, guys, I think kind of remains to be seen.

- Well, let's stay on BuzzFeed, I'll even add the arena group too. Of course, they publish "Sports Illustrated" in my former home, the Street. And for these businesses, you might be wondering, well, why are these stocks seeing a pop? What is AI doing for them? And just from the media standpoint, it might be increased content.

More content, more places to sell ads. More ads, you bring in more money, better profits, et cetera. Maybe these companies stocks go even higher. But even more broadly outside in the core tech industry, you're thinking more bots, more Chat CPT-type things. Less human beings. Less costs. Better profits. I mean, that's very simplistic, but that's why I think you're seeing some of these pops in these stocks.

- Well it makes you think that eventually we're going to see a listicle eight of the best chat and generative AI tools that are out.

- And as a reader, you have to be careful. From a pure media perspective you're opening up these articles. Is there a human? Is there a human component? Especially when it comes to stock market trading material. I mean, this is going to be, I personally think, a big problem, at least in our business news field.

- Well listen, forget about media. I mean, yes, that is one thing. But you also have to be-- like, OK, so all of you're saying the thesis that you're talking about is it worth this, though? Is the cost savings and cost, et cetera, are the increased places for ads, is it worth it to a 218% spike in this particular company?

I mean, I think that investors really have to be careful about this. Of course, I want to mention quickly a couple of other areas, though, where we're seeing this because we've got to talk about what's happening in China as well this morning. We are seeing Baidu spike after it came out and talked about its chat bot that it's coming out with, and just if we can look at the extended trade for some of these guys.

Because Baidu shares are up 12% this morning. It introduced Ernie as it's known in English, which is its conversational generative AI. And then, of course, we also had Alphabet coming out yesterday and saying it's rolling out Bard, which is its latest offering. So there's just a lot of news on this front. So let's continue the conversation and try and figure out how really big this is going to be, and with the changes the generative AI are going to bring for better or for worse.