How ChatGPT is ready to leave its mark on the ASX and the stocks to watch

Goldman Sachs estimates 300 million jobs globally could be lost or degraded thanks to AI.

After an initial rush of enthusiasm for tech stocks which are expected to benefit from artificial intelligence, investors are suddenly looking at mainstream business where ChatGPT could mean boom or bust.

In the UK, British Telecom – England’s version of Telstra – sent shockwaves through business circles a few days ago with an announcement that AI would directly lead to 10,000 job losses in the years ahead.

The London-based BT group is up 30 per cent so far this year and is suddenly attracting some big-name international investors.

In contrast, on Wall Street one of the best-known listed education companies, Chegg Ltd, recently announced poor profit results and added that the group was battling against ChatGPT-style bots in the education market. It turned out American students were using free AI services rather than paying for online education classes

The stock price of Chegg Ltd has almost halved since the revelations and tremors have been felt across all white-collar industries, especially education.

In short, AI is not just a technology story, it’s a business story and investors will need to assess just about everything in the light of the exponential lift in automation emerging from what Bill Gates has tagged the most important invention since the personal computer.

At Wilsons Advisory, analyst Ross Barrows says that AI will initially work as a complimentary factor.

“I think in the first wave we will see AI technology replace tasks rather than jobs – I think of it in terms of the technology acting like a co-pilot where it can compliment existing jobs,” he says.

“Keep in mind that despite the considerable power of AI now, it still can only do tasks, it can’t really do jobs as we know them – you need to be able to everything not just single tasks to do a job properly.”

But AI job cuts in Australia are only a matter of time. Goldman Sachs has estimated that 300 million jobs globally could be lost “or degraded as a result of AI”.

On the other hand it also suggests that AI will lift global GDP by 7 per cent and profits at US listed companies could increase by 30 per cent over the next decade.

In Australia, Barrows has been examining stocks where AI has surfaced as a new factor.

Beyond the obvious vulnerability of white-collar factories such as big banks, insurers and telcos, he expects AI will influence a diverse selection of companies.

He notes that although the big tech companies such as Amazon, Google or Microsoft are getting all the attention on AI, Australian stocks will also be affected.

In the local market he mentions the data centre group NextDC, which already had a lift from the pandemic era boom in internet activity. Now the group is set to benefit from the sheer upscale in computer power that will be required in AI-driven business.

Similarly, beyond the confines of the technology sector, fund managers are using AI tools to distil the key messages from broker reports – or even company presentations – to establish what they will buy or sell.

And of course, our big banks are typically leading the race in the adoption of new financial technology. AI teams allow banks “live” visualisation of their mortgage books which is a key reason mortgage rates now react to customer data at a much faster than previously.

At CBA, chief executive Matt Comyn this week tagged AI as “transformational” and put forward the theory that the nation’s biggest bank is also the AI leader. “We’re experimenting in a more advanced way than some others,” he said after the bank’s annual “technology showcase”.

For now, investors are mostly placing bets on what stocks will win from AI. Fund manager Loftus Peak has done well in recent months from large positions in AI-related chip makers.

Similarly, AI-focused exchange-traded funds such as Betashares Robotics and AI are rising quickly due to having a similar focus.

Indeed the local tech sector has yet to offer a stock with the sort of staggering AI premiums that are emerging in the US market.

Appen, one of the best known potential AI-related plays on the ASX, is actually down around two thirds over the past year.

Perhaps it will need a major bank or telco to make a BT-style call on the future of AI before we really see some serious stockmarket actions around AI.