Sam Altman, co-founder and chief executive officer of OpenAI Inc., speaks during TechCrunch Disrupt 2019 in San Francisco, California, on Thursday, Oct. 3, 2019.
David Paul Morris | Bloomberg | Getty Images
For his day job, Tobias Zwingmann is the managing partner of RAPYD.AI, a German consulting firm that helps clients make use of artificial intelligence. On the side, Zwingmann teaches online courses on AI.
Lately, Zwingmann has been generating lecture notes using ChatGPT, a new chatbot that’s quickly become the latest fad in tech. Zwingmann said he recently asked ChatGPT to explain the mechanisms and workings of a machine learning technology known as a DBSCAN, which is short for density-based spatial clustering of applications with noise, because he is too “lazy to write it all down.”
“I went up and said, ‘OK, tell me a detailed step by step of how the DBSCAN algorithm works,’ and it gave me that step by step,” Zwingmann said.
After a little bit of polishing and editing, Zwingmann said the lecture notes were in good shape.
“This took me like 30 minutes, and before that I would have spent the whole day,” Zwingmann said. “I can’t neglect that this has proven to be hugely beneficial.”
ChatGPT debuted in late November and has quickly turned into a viral sensation, with people tweeting questions, such as “Are NFTs dead,” and requests like, “Tell a funny joke about the tax risks of international remote work.” They include a screenshot of ChatGPT’s response, which often — but not always — makes sense.
The technology was developed by San Francisco-based OpenAI, a research company led by Sam Altman and backed by Microsoft, LinkedIn co-founder Reid Hoffman and Khosla Ventures. ChatGPT automatically generates text based on written prompts in a fashion that’s much more advanced and creative than the chatbots of Silicon Valley’s past.
In a year that’s turned into a dud for the technology sector, with mass layoffs, wrecked stock prices and crypto catastrophes dominating the headlines, ChatGPT has served as a reminder that innovation is still happening.
Tech executives and venture capitalists have gushed about it on Twitter, some even comparing it to Apple’s debut of the iPhone in 2007. Five days after OpenAI released ChatGPT, Altman said that the chat research tool “crossed 1 million users!”
Back in 2016, tech giants like Facebook, Google and Microsoft were trumpeting digital assistants as the next evolution of human and computer interaction. They boasted of the potential for chatbots to order Uber rides, buy plane tickets and answer questions in a life-like manner.
Six years later, progress has been slow. The majority of chatbots that people interact with are still relatively primitive, only capable of answering rudimentary questions on corporate help desk pages or minimally helping frustrated customers understand why their cable bills are so high.
But with early ChatGPT adopters demonstrating the technology’s ability to carry a conversation through multiple queries in addition to generating software code, the world of so-called natural language processing appears to be entering a new phase.
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It’s part of the larger trend. Tech investors are pouring billions of dollars in startups specializing in the field of generative AI, which refers to the ability of computers to automatically create text, videos, photos and other media using cutting-edge machine learning technologies.
Brendan Burke, an analyst at tech industry data firm PitchBook, said a number of early-stage investors have turned their attention from cryptocurrencies and related concepts like web3 to generative AI technologies.
“That’s a trend that is perceptible,” Burke said.
According to PitchBook, the top firms in the space are Khosla, David Sacks’ Craft Ventures, Sequoia, Entrepreneur First out of the U.K. and Lux Capital. Investors have also noticed on platforms like GitHub that many web3 developers have shifted their attention from NFTs and crypto projects to open-source generative AI initiatives, Burke said.
“I think that’s a sign of some of the rethinking that’s going on throughout the early-stage market,” Burke said.
What is ChatGPT?
ChatGPT is essentially a variant of OpenAI’s popular GPT-3.5 language-generation software that’s been designed to carry conversations with people. Some of its features include answering follow-up questions, challenging incorrect premises, rejecting inappropriate queries and even admitting its mistakes, according to an OpenAI summary of the language model.
ChatGPT was trained on an enormous amount of text data. It learned to recognize patterns that enable it to produce its own text mimicking various writing styles, said Bern Elliot, a vice president at Gartner. OpenAI doesn’t reveal what precise data was used for training ChatGPT, but the company says it generally crawled the web, used archived books and Wikipedia.
OpenAI declined to comment for this story.
Elliot said that for now ChatGPT is more of a way for OpenAI to gain publicity and to show what’s possible for large language models, as opposed to a useful piece of software for businesses to incorporate. While ChatGPT is free, OpenAI sells access to its underlying language and related AI models for businesses to use.
“ChatGPT, as currently conceived, is a parlor trick,” Elliot said. “It’s something that isn’t actually itself going to solve what people need, unless what they need is sort of a distraction.”
However, Zwingmann isn’t alone in using ChatGPT for more advanced purposes.
Cai GoGwilt, the chief technology officer of digital contract management startup Ironclad, said his company is exploring how ChatGPT could be used to summarize changes to legal documents. The feature would be helpful for the startup’s legal clients, who routinely alter documents and then notify their colleagues after they made the changes, GoGwilt said.
GoGwilt said ChatGPT offers “more creative” responses compared to similar language models developed by big tech companies. Meta’s AI language tool, dubbed RoBERTa, seems more capable at categorizing and labeling text, GoGwilt said, adding that his company uses both GPT and RoBERTa to power certain features in its digital document software.
At legal research and data company LexisNexis, Min Chen, a vice president, said in an email that she and her team are just starting to test ChatGPT although they already use OpenAI’s GPT-3 software through Microsoft’s Azure cloud.
Chen said GPT-3 is more suitable for LexisNexis because it’s an enterprise product and can be customized. However, her team has been experimenting with ChatGPT and she said it sometimes generates “sensible answers” that are “very impressive.” Still, it has its flaws.
“I am afraid it’s not reliable enough as a decision-making tool for serious legal research,” Min said. “In some cases, ChatGPT will give a very verbose answer that seems to make sense, but the answer is not getting the facts right.”
There’s also the bias problem, which is true for many kinds of AI-powered software.
As Mozilla senior fellow Abeba Birhaneshared on Twitter, ChatGPT produced song lyrics that implied women who wear lab coats are “probably just there to clean the floor,” whereas men wearing lab coats “probably got the knowledge and skills you’re looking for.”
Regarding ChatGPT’s limitations, OpenAI said in a blog post that while the firm is working to mitigate bias problems, the software “will sometimes respond to harmful instructions or exhibit biased behavior.”
Altman said in a tweet over the weekend that ChatGPT is “incredibly limited” and “it’s a mistake to be relying on it for anything important right now.”
Krishna Gade, CEO of AI model monitoring startup Fiddler, said ChatGPT and related language technologies could lead to big “disruptions in web search,” an area long dominated by Google.
Gade, who previously worked at Microsoft’s Bing search unit, said if ChatGPT’s popularity continues to grow along with other chat-based tools that answer questions, Google may have to update its core search technology to more prominently center on chat.
ChatGPT’s rising popularity shows there is a segment of the population that prefers getting information via question and answers as opposed to a typical search query.
Google parent Alphabet has plenty of AI talent and has helped develop some of the core AI technologies used to create systems like ChatGPT. The search engine is also a habit that’s very difficult to displace.
As Zwingmann notes, Google still has a major advantage over ChatGPT.
“The way it works currently is people use ChatGPT and then go to Google to verify the results,” Zwingmann said, with a laugh.
Here’s what happened when we typed in, “Write me a news story about ChatGPT in the style of CNBC.”
As of December 13, 2022, ChatGPT, the new language processing AI from OpenAI, is making waves in the tech industry. The advanced model, which is trained to generate human-like text, is already being hailed as a game-changer for businesses that rely on natural language processing.
ChatGPT’s ability to understand and respond to a wide range of topics has been particularly impressive, with some even suggesting that it has the potential to revolutionize the way we interact with technology. Many experts believe that ChatGPT’s advanced capabilities will be a valuable asset for companies in fields such as customer service, online education, and market research.
One of the key advantages of ChatGPT is its ability to learn and adapt quickly to new information. This means that it can be trained to handle new topics and tasks without the need for extensive retraining. Additionally, ChatGPT is highly scalable, which makes it well-suited for use in large-scale applications. So far, the response to ChatGPT has been overwhelmingly positive, with many praising its advanced capabilities and ease of use. It remains to be seen how ChatGPT will be used in the coming years, but it’s clear that it has the potential to be a major player in the world of natural language processing.
Signage at the Broadcom Inc. headquarters in San Jose, California, U.S., on Monday, June 2, 2025.
David Paul Morris | Bloomberg | Getty Images
The sell-off in artificial intelligence stocks continued unabated Friday stateside. Broadcom shares tumbled more than 11% as investors grew concerned over lower margins and uncertain deals. Names such as Nvidia, Advanced Micro Devices and Oracle fell in sympathy, which caused major U.S. indexes to close lower.
It was a motif patterning the week. Even though the Dow Jones Industrial Average rose 1.1% week on week on the back of outperformance by financial stocks, tech names dragged down the S&P 500 and the Nasdaq Composite, which fell 0.6% and 1.6% respectively for the week.
That said, investors could have just been jittery amid the narrative of an apparent AI bubble, and were spooked by any sign of bad news. After all, Broadcom’s earnings — as well as its guidance for the current quarter — breezed past expectations.
“Frankly we aren’t sure what else one could desire as the company’s AI story continues to not only overdeliver but is doing it at an accelerating rate,” Bernstein analyst Stacy Rasgon, who has a “buy” rating on Broadcom, wrote in a Friday note.
Future prospects also look rosy, according to UBS. “We expect high profitability and the accelerating impact of the AI, power and resources, and longevity themes to drive 2026 performance,” said strategist Sagar Khandelwal.
But in the near term, investors may still be flighty, unless something concretely reassuring, such as Oracle achieving positive cash flow, reassures them the snapping sound is just a twig in the forest.
China’s economic slowdown deepens. Even though the country’s retail sales and industrial production grew year on year in November, their increase missed forecasts and slowed from the previous month. Investment in fixed assets in the January-to-November period contracted from a year earlier.
The end of the ‘Berkshire way’? Several aspects of Berkshire Hathaway’s leadership transition are signaling that the conglomerate is drifting away from the famously decentralized “Berkshire way,” CNBC’s Alex Crippen writes.
Hong Kong court finds Jimmy Lai guilty. The 78-year-old pro-democracy activist and media baron was ruled guilty of sedition and collusion with foreign countries by a Hong Kong court on Monday. The results might unsettle foreign investors, analysts say.
[PRO] China’s food security strategy. The spat between Beijing and Washington over soybean purchases has highlighted the evolution of China’s domestic agriculture industry. Goldman Sachs thinks this is the best way to play the sector.
And finally…
Copper prices have soared this year, hitting multiple record highs, fueled by supply disruptions and fears over U.S. tariffs.
Copper prices have hit multiple record highs this year, fueled by supply disruptions and as fears over U.S. tariffs have led to a surge in demand. The rally is set to continue into 2026.
Citi analysts expect prices of the red metal to skyrocket on the back of stronger demand led by the energy transition and artificial intelligence sectors. Electrification, grid expansion and data-center build-outs require large amounts of the metal for wiring, power transmission and cooling infrastructure.
Signage at the Broadcom Inc. headquarters in San Jose, California, U.S., on Monday, June 2, 2025.
David Paul Morris | Bloomberg | Getty Images
The sell-off in artificial intelligence stocks continued unabated Friday stateside. Broadcom shares tumbled more than 11% as investors grew concerned over lower margins and uncertain deals. Names such as Nvidia, Advanced Micro Devices and Oracle fell in sympathy, which caused major U.S. indexes to close lower.
It was a motif patterning the week. Even though the Dow Jones Industrial Average rose 1.1% week on week on the back of outperformance by financial stocks, tech names dragged down the S&P 500 and the Nasdaq Composite, which fell 0.6% and 1.6% respectively for the week.
That said, investors could have just been jittery amid the narrative of an apparent AI bubble, and were spooked by any sign of bad news. After all, Broadcom’s earnings — as well as its guidance for the current quarter — breezed past expectations.
“Frankly we aren’t sure what else one could desire as the company’s AI story continues to not only overdeliver but is doing it at an accelerating rate,” Bernstein analyst Stacy Rasgon, who has a “buy” rating on Broadcom, wrote in a Friday note.
Future prospects also look rosy, according to UBS. “We expect high profitability and the accelerating impact of the AI, power and resources, and longevity themes to drive 2026 performance,” said strategist Sagar Khandelwal.
But in the near term, investors may still be flighty, unless something concretely reassuring, such as Oracle achieving positive cash flow, reassures them the snapping sound is just a twig in the forest.
Oracle will finish data centers on time. The company issued its response to a Bloomberg report, which cited unnamed people, that Oracle will complete data centers for OpenAI in 2028 rather than 2027. “There have been no delays,” Oracle said.
Coinbase to have an in-house prediction market. It will be powered be Kalshi, a source close to the matter told CNBC, and is a play to expand asset classes available on the cryptocurrency exchange.
The end of the ‘Berkshire way’? Several aspects of Berkshire Hathaway’s leadership transition are signaling that the conglomerate is drifting away from the famously decentralized “Berkshire way,” CNBC’s Alex Crippen writes.
[PRO] China’s food security strategy. The spate between Beijing and Washington over soybean purchases has highlighted the evolution of China’s domestic agriculture industry. Goldman Sachs thinks this is the best way to play the sector.
And finally…
A bear statue stands outside the Frankfurt Stock Exchange, operated by Deutsche Boerse AG, in Frankfurt, Germany, on Friday, March 13, 2020. Top European CEOs are fearing a euro zone recession as a confluence of economic shocks continues to threaten the outlook for the bloc.
U.S. President Donald Trump’s verdict on Europe: a “decaying” group of nations led by “weak” people. His criticism in a recent Politico interview adds to a tough period for the bloc, with challenges on multiple fronts testing European leaders in the final weeks of the year.
This week looks set to be critical, with a high-stakes summit in Brussels and the European Central Bank’s final policy meeting of the year. Key topics for this week include defrosting frozen Russian assets for Ukraine aid; EU vs. U.S. in trade and tech, and updated economic figures at the ECB meeting.
Sometimes the stakes are so high, the degree of difficulty so immense, that it simply may be too hard to game. When that’s the case, no amount of formal research will help you fathom the stock implications. Yet, you have inherited the issues and they must be dealt with — or you are too at sea to judge them. We have not one, but two situations — and potentially three — that concern me especially because the price-to-earnings multiples are very high. The two stocks in question? Broadcom and Costco . Broadcom, the nervous system for many of the hyperscalers, is trying to encroach upon fellow Club name Nvidia , the leading AI chipmaker whose fast processors are at the heart of so many artificial intelligence data centers. Let’s take Broadcom first. For its custom AI chip business, Broadcom’s list of clients include Alphabet -owned Google, Meta Platforms , TikTok parent ByteDance, and OpenAI . Additionally, AI startup Anthropic also was recently revealed as a $10 billion customer . Meanwhile, Broadcom is rumored to be talking with Microsoft about shifting its business away from its director competitor in the custom chip design space, Marvell Technology . And there were also concerns that Marvell was losing some business from Amazon. Importantly, Marvell CEO Matt Murphy, whom I trust implicitly, came on “Mad Money” and said he hadn’t lost any business. I believe him. At the same time, Bloomberg News on Friday reported that Oracle pushed back the opening date for some of the data centers it’s building for OpenAI, the giant startup run by Sam Altman. OpenAI happens to be committed to spending $300 billion over five years for computing power from Oracle. That figure is thought to be rock solid because it is in Oracle’s RPO, or remaining performance obligations. It represents more than half of Oracle’s $523 billion RPO. Anything that indicates that OpenAI is not money good could cause a tremendous negative ripple for this entire ecosystem — not just OpenAI, although OpenAI is at the center of the debate. According to Bloomberg, the timeframe for the pushout is from 2027 to 2028, with labor and material shortages cited as the reason. Importantly, Oracle said in a statement there have been “no delays to any sites required to meet our contractual commitments, and all milestones remain on track.” Oracle is to be trusted because it is Larry Ellison’s company and Ellison doesn’t make false claims. But is Sam Altman to be trusted? We don’t know enough about him and his company is private. Bloomberg could be wrong in its story. But maybe it isn’t. Many took the story as gospel despite Oracle’s response in that statement. It is possible, however, for everyone to be right. We know from Coreweave’s quarterly report that these sites can have problems being built . They are very complicated and companies are all fighting for the same components. Oracle holds itself out as an expert in building them. What happens, however, if Oracle has problems building the data center sites for OpenAI and that is the source of the pushout? What happens to the pace of chip orders from Nvidia, which is almost always a part of every data center? These are the fundamental questions that must be answered. We thought we would get some clarity on the broader state of the AI buildout when Broadcom reported quarterly results Thursday night. But the answer was obscured by an issue identified by CFO Kristen Spears on the Broadcom conference call. At the beginning of the call, Broadcom said it had some $73 billion in AI backlog, including orders for its AI server systems that contain its custom chips and other components. That number excited Wall Street and initially drove the stock up about $15 a share in after-hours. But later on the call, Spears said the AI system business was less profitable than other chip-only orders because of some pass-through costs with lower margins. When Spears revealed that, Broadcom’s stock did the dreaded pirouette and it fell to about $380, giving up a frightening $35 from its overheated after-hours level. When that happens it’s a nightmare, which is why the stock fell even more during Friday’s regular session and ended the day at $359.93. Some of that additional decline came from the first issue I mentioned, the possible delay related to Oracle’s work for OpenAI. The rest was from the pass-through issue. AVGO YTD mountain Broadcom’s year-to-date stock performance. Now let’s go back to the first issue. I never like to be in a battleground because the possible results are too murky. These issues created their own battleground. They can’t really be resolved because OpenAI is private. When we hear about potential delays involving OpenAI, even if other reasons are cited in the article, we can’t help but wonder whether it will have the money to meet all its obligations in the coming years. How do we know if Broadcom’s business is not as robust as we thought? We do know OpenAI has access to $40 billion in capital , or at least that it says it has that access. We do know that it just landed a billion dollars from Disney for a stake in the company. It was all very odd. Why didn’t OpenAI have to pay Disney and not vice versa? Was it really about making sure OpenAI was able to get the characters for its AI video generation tool Sora and while blocking Google? Still, I found the deal murky and very similar to the kinds of crazy deals I heard about in 2000, deals that everyone told me were smart and I thought were preposterous. All of this is very theoretical. I don’t like theoretical. Who wants to be caught in this web of intrigue? Not me. Not anyone else. Hence the collapse in Broadcom’s stock. I can go round and round about how OpenAI is worth more than we thought because of this business-to-business deal. Enterprise business is worth more than business-to-consumer deals, the current focus model of OpenAI. That’s more like the aforementioned Anthropic, whose heavyweight investors include Amazon, Microsoft and Google. Anthropic is loved by the Street. OpenAI is not as trusted because of the craziness we have seen from the firm, including CFO Sarah Friar’s odd comment that the government could always “backstop” the company . That’s been denied later on by Friar, but it’s kind of a genie-out-of-the bottle comment. Again, it’s all too hard. Which means that Broadcom’s stock is worth less than we thought, at least around this one issue. Once again, we have to play a game of “who do you trust?” I trust Hock Tan, the longtime CEO of Broadcom, which means you shouldn’t be bailing from the stock. Others clearly have less faith, or else the stock wouldn’t have come down a horrendous $46, or 11.4%, on Friday. This is not the first time Hock has been doubted by the market. It is also not the first time that the market has been wrong. I am with Hock. We are, of course, standing by Broadcom, which even with Friday’s pullback remains up 55% year to date. However, because its price-to-earnings ratio is so high, at almost 42 before earnings, there’s not much room for error. That’s just how it goes with high-multiple stocks. So, it’s fraught and we don’t like fraught – the battleground. We do think Hock will be right, just as we did a few years ago when the stock broke down after another quarter and it turned out to be a false worry accompanied by a huge amount of insider buying . Could that happen again? I think so. We just don’t know yet. To sum up, my judgment is that Broadcom is fine, but the position is a lot harder to defend at this moment. We will defend it by owning it, not buying more. Now, let’s cover Costco. The first, and most salient, issue is the P/E multiple, and yes it almost always comes back to the multiple. At 43 times next year’s earnings, it is high versus the S & P 500, which trades at roughly 22 times forward earnings. But Costco’s valuation being well above the market is not unusual historically speaking. In fact, at this time a year ago, Costco’s P/E ratio was north of 50 while the S & P 500’s was still around 22, according to FactSet data. Costco’s multiple coming down would be fine if the stock weren’t near its lows. What we’re seeing now indicates that the fear is the stock must go lower because investors are not as willing to pay up as much for future earnings — that is how you get multiple compression. To be sure, Costco’s quarter was solid, in line with the estimates. But it wasn’t better than the estimates. The earnings have to be better than the estimates to maintain its high multiple: witness Walmart with a 40 multiple, as close to Costco as I can recall. That, in and of itself, is telling. Why is that? There’s a couple of reasons. First, customers aren’t renewing their membership as they used to. We have seen this impact for several quarters, and it is quite unusual. The company has an excuse: These are mostly younger people who get their membership online versus warehouse signups. But I don’t care about the excuse. It is a red flag. Further, there was “lumpiness” to the quarter, something I don’t like but I think got better as the quarter ended. Third, Costco CFO Gary Millerchip – a rather new hire from Kroger brought in to replace the irreplaceable long-time finance chief Richard Galanti – once again used the word “choiceful” about the consumer. Choiceful, I think, is a code word for “too expensive.” I don’t associate that word with Costco. Suboptimal. COST WMT YTD mountain Costco’s year-to-date stock performance versus Walmart. So, what to do? As I said during a Morning Meeting last week , I am very concerned about this and about how the analysts seem to be focused more on Costco’s technology initiatives – although two analysts on the conference call did ask on about the renewal rate, and the answer was that thanks to some targeted initiatives, the renewal rate for online members will be a little better than it was. That wasn’t reassuring. Unlike Broadcom, the high multiple here can’t stay high when the comparable sales aren’t much better than expected. This distresses me. I have been kind of possessed by it. Is Walmart catching up? Is Walmart passing it? Is Walmart better than Costco? Comparisons, as I know from my mother, are odious. But it’s a real worry. I was thinking Costco would go up when it reported that quarter because there was progress with online and there was additional talk about bolstering its advertising initiatives like Walmart has. But they are so far behind, that, again it is worrisome. I play with an open hand. I weigh all of this against a long history of being special. I don’t think it helps that Costco is tussling with the administration over tariffs and, before that, diversity efforts . Whether you like or agree with Costco, you have to accept that some people might be turned off by these stances. As a shareholder, I am not happy about this because I am trying to figure out the real reason why there is a lower renewal rate, especially among young people. Why be as concerned as I am? Because of Target , that’s why. Many stuck with Target long after things went awry there. It’s retail. Retail is one of the hardest businesses. You can slip. You can fall. That’s why you should not be surprised if we take action on the position. I hate to ever sell this stock. The company is so amazing. My trips to the stores remain exciting. But we can’t afford a Target. We just can’t. That said, you have to expect some action. I can’t lose sleep over this one. So, sigh. It’s not what we want. But it almost has to happen. (Jim Cramer’s Charitable Trust is long COST, AVGO, NVDA, AMZN, MSFT and META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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