Eight pictures to understand the great changes in the tech world in 2023: the rise of chatbots, and the struggle of non-AI startups

Highlights:

• 1

  There are many positive trends in the tech world in 2023, with tech giants recovering and Nvidia having a market capitalization of more than $1 trillion

• 2

  A number of tech companies have successfully conducted IPOs, and AI chatbots such as ChatGPT have become the focus of attention.

• 3

  Despite increasing investment in AI, venture capital from other startups has declined for the second year in a row.

• 4

  With the exception of Netflix, streaming services are generally struggling to make a profit.

• 5

  The average price of new electric vehicles in the United States will drop significantly in 2023, with Tesla's price cut being the most notable.

Tencent Technology News reported on December 8 that according to foreign media reports, in 2023, the technology industry will show some positive trends. The stock prices of big tech companies are starting to recover, and Nvidia's stock price is soaring, making it a chip giant with a market capitalization of more than $1 trillion. In addition, several companies have successfully conducted initial public offerings (IPOs) this year, attracting a lot of attention from the market. At the same time, AI-powered chatbots are in the public spotlight, most prominently OpenAI's ChatGPT.

However, 2023 is not all good news for the tech world. Despite increasing investment in AI, venture capital from other startups has declined for the second year in a row. Many start-ups have secured new funding at lower valuations than previous funding rounds, suggesting that there are concerns about the prospects of these companies. In addition, with the exception of Netflix, streaming services are generally struggling to make a profit. Under Elon Musk's leadership, the once-Twitter company went into turmoil, causing a large number of advertisers to pull off their money.

The cryptocurrency space is also showing a mixed picture. This year, the conviction of Sam Bankman-Fried, the founder of crypto exchange FTX, and the plead guilty of Binance and its CEO Changpeng Zhao, cast a shadow over the market. However, the price of bitcoin has more than doubled, which shows that investors' confidence in cryptocurrencies has not been completely lost. At the same time, investment in creator economy startups has declined, but creators have made more money through influencer marketing and other means.

In conclusion, the tech world in 2023 presents some positive trends, but there are also some problems and challenges. The market needs to pay close attention to the development of these trends in order to better grasp the investment opportunities and risks.

Here are eight charts to help us understand the current state of the tech world this year:

1. Chatbots are on the rise

In November last year, OpenAI quietly released ChatGPT, an artificial intelligence chatbot, as a "low-key research preview". However, the response to it has been overwhelming. Millions of people are vying to use ChatGPT to query a variety of questions. This excitement has sparked a frenzy for generative AI, with investors and tech giants alike pouring billions of dollars into active young startups.

According to Similarweb, nearly a year after its release, ChatGPT's website has received nearly 1.7 billion visits. In contrast, competitors such as Google's Bard and Anthropic's Claude are still far behind in terms of traffic despite huge investments. Compared to ChatGPT, Bard, the second most popular chatbot, had 266 million visits in October.

However, OpenAI's leadership is far from unbreakable. Although the company's recent annualized revenue exceeded $1.3 billion, it is increasingly competitive with its largest shareholder and sales partner, Microsoft. Microsoft has built its own large language models and is working with OpenAI's competitor's open-source models. In the long run, businesses are still struggling to put generative AI technology to work at a reasonable price.

Overall, ChatGPT quickly gained huge traction after its release and led the frenzy of investment in generative AI. However, competition is intensifying, and OpenAI's position is also being challenged. Still, the future of this field is full of opportunities and potential.

2. Venture capital in the non-AI sector has dropped sharply

Global venture capitalists are gradually pulling out of the frenzied investment state seen during the pandemic, and investment in start-ups has fallen to 2018 levels. In addition to their enthusiasm for AI, venture capitalists have become more conservative in their approach to trading, given rising interest rates and resistance from limited partners.

A striking sign of the stock market pullback is that more and more companies are raising capital at lower valuations than before. Carta, a software provider that tracks 41,000 U.S. startups, said they accounted for 18.5 percent of startup funding in the third quarter, compared with 5.2 percent in the first quarter of 2022.

It's not just startups that are in this predicament, venture capital firms themselves are going through the throes. Some venture capital firms are laying off employees, consolidating or selling stakes in their portfolios in an attempt to boost returns.

3. The IPO market has not improved much

2023 would have looked like a good year for the IPO market, but interest rates continued to rise, dampening investor interest in high-growth companies that typically seek to go public.

In September, when three tech companies (Arm, Klaviyo and Instacart) took advantage of a small window to go public, there seemed to be signs that something was not so good. Instead of opening the windows wider, their mediocre trading performance closed tighter.

We are unlikely to see big-name companies go public in December, and the vast majority of companies that planned to go public this year in early 2023 have already postponed those plans until 2024.

4. Meta's advertising business recovered, and X was hit hard

Social media advertising has seen a resurgence this year, as evidenced by Meta's improved financial performance. However, not all social media platforms benefit from this.

Since Musk took over Twitter in October 2022, most of the platform's ad revenue has evaporated. This is not only because Musk has relaxed content moderation rules, allowing more controversial content to enter the platform and causing advertisers to withdraw. And because Musk's own tweets have also frightened many marketers, and his profanity response to advertisers last week made things worse.

On the other hand, ByteDance's TikTok has seen an increase in its share of social media ad revenue, while Meta, Snap, Pinterest and reddit have largely maintained their share.

5. Bitcoin prices have soared

This year has been full of bad news in the crypto space, including the bankruptcy of crypto lender Genesis, the guilty verdict of FTX founder Bankman Fried, and the guilty plea of Binance Changpeng Zhao. However, the price of bitcoin continues to rise, even more than doubling from a year ago.

Despite the bad news, investors don't seem to care, preferring cooling inflation, the foray into the crypto space by traditional financial giants, and court rulings that ease regulators' strict restrictions on cryptocurrencies. After experiencing rising interest rates and the collapse of FTX, Bitcoin is trading below $17,000 in early 2023. In March, crypto-focused Silvergate Bank and Signature Bank, as well as start-up-focused Silicon Valley Bank, collapsed, triggering a sell-off. However, the Federal Reserve stepped in to support customer assets, and within a week of the government's move, the price of bitcoin rose by 40% to $28,000.

In addition, expectations that the U.S. Securities and Exchange Commission (SEC) may approve Bitcoin spot exchange-traded funds (ETFs) have boosted the price of Bitcoin. Crypto bulls believe that ETFs that will open Bitcoin to more investors will further boost demand. When investment giant BlackRock submitted an application for a Bitcoin spot ETF, the price of Bitcoin rose 17% in June. Coupled with growing expectations for the Federal Reserve to cut interest rates, the price of Bitcoin has soared over the past two months.

6. The creator economy is polarized

There are two very different stories in this year's creator economy: venture capital investment in startups serving creators has plummeted, and spending on influencer marketing, the number one way creators make a living, is steadily increasing.

A big reason for this disconnect is that the creator economy is very resilient and switches quickly when something doesn't work. They manage lean teams and often use free tools like Google Sheets. Startups try to get them to pay for custom products, such as specialized accounting software, but these products end up not finding a broad enough customer base of creators.

There are nearly 500 creator economy startups in The Information's creator economy database. At least 53 of them were merged or acquired, nine went out of business, and two filed for bankruptcy. Other companies are turning, or forced to sell at low prices.

7. Tesla and other electric vehicles have slashed their prices in the United States

The average price of new electric vehicles in the U.S. has dropped significantly in 2023 due to tepid customer demand and excess auto inventory. According to Cox Automotive, an automotive industry analyst firm, the average price of an electric vehicle was $50,683 in September, down from $65,295 a year ago.

Even Tesla, the largest seller of electric vehicles in the United States, has not been spared, and so far, the company has often led the way in cutting prices. Its high-end SUV, the Model X, saw the biggest price cuts. For U.S. buyers who bought a Tesla in October 2022, the base price is $120,990. By September 2023, the price fell to $79,990, a drop of 34%. The cheapest model in Tesla's lineup, the Model 3, dropped by 17% from $46,990 in October 2022 to $38,990.

Other automakers have also lowered the price of electric vehicles. Ford lowered the price of the F-150 Lightning pickup and E-Mach sports car, and General Motors lowered the price of the Bolt.

8. Streaming media business revenue is gradually increasing

This year, entertainment companies are looking to get more revenue from their streaming business to make up for the slowdown in growth. In the process, Warner Bros. Discovery became the most successful one, reporting the profits of its direct-to-consumer business (net of interest, tax, depreciation and amortization expense). However, it should be noted that this part of the business includes its traditional HBO cable channel, which has contributed to the profit figures.

At the same time, Disney is also trying to cut losses in its streaming business. Still, Disney, Paramount and Comcast's NBCUniversal have lost hundreds of millions of dollars in their streaming business every quarter. In contrast, Netflix now generates more than $1 billion in cash per quarter, indicating that after years of losses, the company is finally making consecutive profits. (Compiler/Golden Deer)