Sensetime (HKG: 0020) shares are up 10% in Hong Kong Tuesday morning. The story is that a rival AI to ChatGPT is to be launched. Something which sounds sensible coming, as it does, from China's largest AI player. The company hasn't confirmed exactly what it is about to launch, only that something is about to happen: “A SenseTime representative confirmed the company will soon send out invitations to a media event, without further details.” Given the excitement in this area clearly such an announcement is going to create interest.
It is possible to wonder a little bit though. Google's recent unveiling of Bard led to $120 billion being wiped off Alphabet's market capitalisation. The launch didn't quite go as hoped, embarrassing mistakes happening. So the unveiling might not go quite as planned, even if the rumour of it being about to happen creates that rising share price. We might, at this point, call into consideration that old market saw, buy the rumour, sell the announcement.
Sensetime share price from Hong Kong Stock Exchange
It's also true that a slightly deeper consideration of the ChatGPT competitors is necessary. There's no doubt that these AIs - or to be more accurate, large language models - are going to change the world out here. But that's not enough to create a soaring share price. That value will be created - yes, obviously. But profits are that value which a producer can capture and retain. The major determinant there is how much competition will the producer face?
Another way of looking at this is that when it's steam engine time then it's steam engine time. We're here in LLM/AI time. Many people have access to the same base technologies. There are many rollouts of models roughly as good as each other. There's no obvious market winner at present. Indeed, there's theoretical musing that there never will be a clear technological leader simply because the AIs, the LLMs, can read each other and thus incorporate any specific advances rather quickly.
That is, that AIs are an intensely interesting development is entirely true. But it's not wholly obvious that they're going to be an interesting profitable one. Which is something that might temper the stock market interest in those who produce them.