ChatGPT’s traffic drop raises AI bubble concern

ChatGPT’s worldwide traffic dropped for the first time in June, sparking concern among experts about the risk of an artificial intelligence (AI) industry bubble, according to a report by the Beijing-based Securities Daily.

Citing data from analytics firm Similarweb, the report said that ChatGPT’s worldwide traffic growth began to level out in the first five months of this year, dropping from an unprecedented 131.6 percent in January, to 62.5 percent, 55.8 percent, 12.6 percent and 2.8 percent in the following months. In June, its worldwide traffic dropped by 9.7 percent for the first time since its debut.

The Chinese market has been bullish on AI so far, especially on artificial general intelligence (AGI). According to Chinese financial data provider Wind Information, ChatGPT indices in China’s A-share market have shot up 71.77 percent in the first half of the year, with significant capital inflow. As of July 4, China has more than 80 large-scale AI models with one billion parameters. Securities Daily pointed out that the potential risk of an industry bubble has emerged.

"At present, China’s AGI market is a crowded one and signs of a market bubble have already emerged, like the excessive high evaluation of start-up companies, and the frequent cashing out of listed companies’ shareholders. These are worrying signs,” said Guo Tao, an angel investor and senior AI expert.

Zhang Xiaorong, a professor with Anhui Normal University and president of a technology research institute, cautioned that AGI technology is not yet fully developed, with many challenges remaining in its application. Rosy market expectations can lead to overestimations in its potential and evaluation. Once the technology fails to meet market expectations, the bubble will burst, Zhang said.

AI algorithm expert Huang Song also urged caution. “There are now signs of overheating in China’s AGI industry. The models that some companies developed are not comparable with real large-scale models in terms of their parameters and capacities, resulting in a sort of a fake AGI,” Huang said.

Experts contacted by Securities Daily all agreed that a moderate bubble is conducive to the industry’s development, as it helps enterprises get more funding and resources. But industrial overheating must be avoided.

"Enterprises must find their own positioning in the market. The AGI industry is diverse, and it’s not necessary to only focus on building large-scale models. There are also good prospects in other niche fields,” said Huang. 

Zhang added that China’s AGI industry needs to deal with five major issues, namely regulation and standardization, technological innovation and application, industrial cooperation, market transparency, and investor education.

“We should establish an effective system of industrial regulation, standardize market practices, and avoid speculation. It is necessary to focus on solving real problems, increase industrial efficiency, and explore the commercial feasibility and actual value of technology. It is also necessary to promote cooperation and communication among enterprises, and to maintain and strengthen fair competition in the market. We should intensify information disclosure, foster and educate investors on their risk awareness to help them make rational investment decisions,” said Zhang.