Remember when we realized that all the kids these days are just using ChatGPT to earn their degrees instead of their actual brains?
Well, generative AI isn’t just shaking up how people learn (or don’t learn). It’s also reshaping the entire education landscape, including the companies that traditionally provide learning assistance: education tech.
Take Coursera, which surged 36.23% today after a stellar Q2: The company not only beat top and bottom line earnings expectations, but raised its revenue outlook for the full year to between $738 million and $746 million, above previous estimates of $720 million and $730 million.
“This quarter, we attracted more than seven million new learners looking to master emerging skills that can advance their careers,” said Coursera CEO Greg Hart in a statement.
But what shareholders are most excited about is how the platform is utilizing AI. Coursera is not only leveraging machine learning to translate courses to expand into international markets, but it’s also literally teaching courses on AI itself. The company said it recently brought in over 10 million enrollees in generative AI courses and certifications.
Today, Bank of America analyst Nafeesa Gupta increased her price target on Coursera from $7 to $12 and upgraded her rating from “underperform” to “neutral,” citing the company’s impressive margins, strong subscription growth, and lower content costs.
AI is grading on a curve
While some are ably adapting to this brave new world, others are helplessly watching ChatGPT eat their lunch.
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You may remember when Duolingo made headlines a few months ago when management told everyone they were going to be an “AI first” company—to the eyeroll of actual humans. While the CEO has walked back his zeal for robots (sort of), its stock is up 116.32% in the last 12 months, outpacing the S&P 500’s gain of 18.33%.
Notorious cheating homework assistance platform Chegg, on the other hand, has been struggling. Shares are down 55.11% in the last 12 months, and in May it slashed 22% of its workforce as it acknowledged that ChatGPT is taking its market share faster than it can write a 10th-grade English paper on King Lear.
Zoom out: Chegg has traditionally been a platform where students can post homework questions, and now, with chatbots, it’s quickly becoming obsolete. Duolingo is using AI to cut costs, while Coursera, which offers classes, is still a platform that AI can’t replace (yet).
Classrooms are changing quickly, but we’re still in the early innings of the AI race—which companies earn an A+ and which are left repeating a grade is still an open question.—LB