Shares in Pearson PLC (LSE:PSON) dropped after an online learning company, Chegg, said its sales had been hit by the use of artificial intelligence chatbot, ChatGPT.
New York-listed Chegg Inc, which offers on-demand answers to college course questions, saw its shares fall 49% to US$9 on Tuesday, after withdrawing its full-year guidance.
Shares in other digital education companies, such as Udemy and Coursera, both fell 6%, while in London Pearson fell 15% to 754p.
Earlier this year the FTSE 100-listed publishing and education company struck a deal to sell its international online program management arm, Pearson Online Learning Services (POLS), to private equity firm Regent. The sale followed a strategic review.
Chegg chief executive Dan Rosensweig said generative AI such as ChatGPT and Google's Bard would affect society and business “at a faster pace than people are used to”.
“Since March we saw a significant spike in student interest in ChatGPT,” he said. “We now believe it’s having an impact on our new customer growth rate.”
The use of generative AI, which can replicate some services and products more cheaply, is presenting a new challenge to businesses, with investors speculation the education sector is likely to see further disruption in the near future.
In the tech sector, for example, International Business Machines Corp said this week it is hitting the brakes on hires for certain roles as it aims to replace as many as 7,800 roles with AI systems, while Morgan Stanley (NYSE:MS) signed a strategic agreement with ChapGPT developer OpenAI to develop AI-led financial advisory services.
On the other hand, Samsung joined the ranks of JPMorgan, Bank of America and Citigroup in banning employees from using chatbots on security grounds.
AI guru expert Geoffrey Hinton quit his advisory role at Google and warned it was only a matter of time before AI became more intelligent than humans and more than 1,000 leaders in the AI industry have called for a pause on AI rollout in order to shore up necessary policy frameworks.