Thematic Spotlight: GPT-4o Shows the Market a Glimpse of the Future

Artificial intelligence (AI) is once again sending shockwaves across the stock market, thanks to a new invention from OpenAI. Last week, the generative AI pioneer announced a new AI model dubbed GPT-4o.1 The ‘o’ in its name stands for ‘Omni’, referring to the AI’s new multimodal capabilities which allow it to understand and generate answers in response to anything from text to audio and video.2 The new model also improves on the processing speed of the already highly intelligent GPT-4, an advancement many tech enthusiasts have stated as one of the biggest drawbacks of its prior iterations. Finally, GPT-4o also showed off a hyper-realistic text-to-speech system, developed in collaboration with professional voice actors to produce extremely lifelike audio responses.3

Market reaction to the new GPT model demonstrated just how important AI implementation has become to investor expectations. On one hand, firms that had secured relationships with OpenAI (rumoured or not) responded positively to the new advancements. Apple, which is slated to announce AI functionalities on the iPhone in June (most likely powered by ChatGPT), has climbed 3% since the tech demo;4 and Reddit Inc., which recently forged a partnership with OpenAI to bring ChatGPT to its platform, jumped more than 10% last Friday.5 On the flipside however, Duolingo and Chegg, both online edu-tech companies reliant on customer interactions, fell by as much as 5% on the day of the demonstration –signalling investors fear their tech may soon become redundant.6

The next big test of market appetite for AI will be this Wednesday, where Nvidia will report its latest quarterly earnings. Investors will be on the look out for outsized AI hardware demand as the firm sits on the cusp of doubling its market-cap year-to-date despite already trebling the year prior.7

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.