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The three-year anniversary of ChatGPT’s release is on Sunday.
For investors and the corporate world, a lot more than three years’ worth of change has followed.
Stock prices have soared. Workflows have changed. Staffing needs have been radically altered. A massive domestic infrastructure buildout is underway.
The economy has become increasingly K-shaped, with the distance widening between the financial haves and have-nots in both the corporate and consumer realms.
The transformed state of the economy and markets is remarkable on its own merits. But against the backdrop of the markets from which this artificial intelligence boom emerged, the turnaround is even more impressive.
Simply put, ChatGPT didn’t just catalyze the biggest technological boom in a generation; it offered a catalyst to turn around one of the lousiest market environments investors had been dealing with since the financial crisis.
On Oct. 12, 2022, the S&P 500 hit its lowest point of the post-COVID sell-off, falling 25% from its record high reached on the first trading day of the year.
By the time OpenAI released ChatGPT on Nov. 30, 2022, the S&P 500 had bounced almost 13% off its lows, but the index still wouldn’t make a new record until January 2024.
In the fall of 2022, inflation was raging, and the Federal Reserve was aggressively raising rates in an effort to finally catch up. Tech stocks, which had been the market’s darlings coming out of the pandemic, were at the center of the market’s storm.
At their year-to-date lows, shares of future AI winners like Nvidia (NVDA), Meta (META), and Palantir (PLTR) were down almost 70% in 2022. Apple (AAPL) stock fell almost 30% in 2022. Alphabet (GOOG, GOOGL) stock dropped nearly 40%. Amazon (AMZN) shares were cut in half.
And it is with this context that the doubt which has seemed to dog this bull run becomes more explicable.
OpenAI’s announcement unveiling ChatGPT in November 2022 was six sentences long.
Eighteen months before its ChatGPT release, OpenAI was valued at $14 billion in its latest fundraising; today, the privately held company is worth $500 billion. Less than 20 companies in the world are worth more.
“We’ve trained a model called ChatGPT which interacts in a conversational way,” OpenAI said in its announcement. “The dialogue format makes it possible for ChatGPT to answer followup questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests. … We are excited to introduce ChatGPT to get users’ feedback and learn about its strengths and weaknesses.”
This product release did little to tip off investors, users, or the general public to the revolution the company was about to kick-start.
A simple product announcement you could read in about 10 seconds was going to rescue a market and economy mired in widespread layoffs and a 40-year high in inflation? Unlikely. And yet, that’s how it went.
As the AI boom enters its fourth year, its understated origins will continue to shape the current understanding of its progress.
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