ChatGPT makes investors drool, but could it bring home the bacon?

When ChatGPT— the resourceful, talkative, and sometimes deranged chatbot from OpenAI — was asked this week how much the company behind it is worth. His responses included: “It is likely to be worth hundreds of millions of dollars, if not more. ”

Microsoft, which rumored to weigh $10 billion investment in OpenAI on top of an earlier $1 billion commitment, the company is betting that the company is worth a lot more, despite the fact that neither ChatGPT nor other artificial intelligence models built by OpenAI are yet raking in huge sums of money. OpenAI has created some impressive and attention grabbing demos and supports the popular autocomplete feature for programmers offered by Microsoft GitHub. But despite the hype around its technology, the startup never created a breakthrough, high-margin product or business.

“We don’t really know where ChatGPT will succeed,” says James Cham, partner at Bloomberg Beta, investment company. But while the bot’s path to wealth may be unclear, Cham shares the sentiment of many venture capitalists and entrepreneurs that the technology behind the bot will pay off big. OpenAI technology is at the heart of the growing interest in so-called generative AI, a term that covers algorithms that can generate text, images, or other data.

Cham compares the current situation to the early days of the Internet, when some obscure but evocative demonstrations preceded dramatic changes in how software developers, technology companies, and society at large were working. “We’ve had decades of great AI demos, but this is the first demo you give it to someone and they’re really excited about the possibilities,” Cham says of ChatGPT.

The OpenAI chatbot took the internet by storm when it was released in December 2022, demonstrating an uncanny ability to answer questions and perform tricks such as creating mostly coherent essays, creating working computer code, and pondering the meaning of life. It runs on GPT-3, a text generation algorithm developed by OpenAI that receives a huge amount of text taken from the Internet and other sources, and then goes through additional training on how to answer questions.

Some developers were so inspired by ChatGPT that they quickly used it to build applications such as spreadsheet helper capable of performing complex calculations in response to a simple typed query.

But because of the way ChatGPT works — finding statistical patterns in text rather than associating words with meaning — it also frequently makes up facts and figures, misunderstands questions, and exhibits the bias found in its training data. This is likely to complicate efforts to widely use the technology, for example by mixing misleading or biased information into search results.

One reason for the tech industry’s hype around ChatGPT, fueled by its salon gimmicks, is the suggestion that it could undermine the long-standing dominance of Google and other tech giants by allowing smaller companies to outperform much larger competitors. One popular theory is that the bot could convert web search.

For Microsoft, additional investment in OpenAI could offer a way to ensure that in the event of an AI breakthrough, the company not only does not suffer, but also benefits. Nathan BenaichInvestor Air Street Capital, which tracks AI trends, says that while there is a lot of hype around generative AI, Microsoft can use the technology to improve its products in many ways.

The company’s broad and diverse product portfolio, from enterprise and cloud services to consumer devices and software, opens up many potential opportunities. Microsoft is already using the technology behind ChatGPT to automatically generate code snippets in its Visual Studio product. reportedly is considering using ChatGPT to improve the performance of its lagging search engine Bing.

“The surface—the application space that Microsoft has for all of its customers—is huge,” says Benaich. For Microsoft, a company worth about $1.7 trillion, $10 billion is not a lot of money given the potential payout, he said. Semafor said the investment would give OpenAI a $29 billion valuation.