By Kate Yuan

(JW Insights) Apr 11 -- Chinese AI giants iFlytek (科大讯飞) and 360 Security Technology (三六零) were hit in their stocks after the official Economic Daily warned of a bubble in the AI chatbot craze, Yicai Global reported on April 10.

The Economic Daily said in a commentary on April 10 that the ChatGPT concept sector is showing “signs of a valuation bubble,” the entire sector’s price-to-earnings ratio had been as high as 13,600 percent as of April 6.

The stocks of several Chinese AI companies fell by their daily limits on Chinese mainland exchanges on April 10. The Yicai Global report said that Kunlun Tech, Beijing Haitian Ruisheng Science Technology, and BlueFocus Intelligent Communications Group also slumped on the same day.

Share prices have surged even though ChatGPT is still in its infancy in terms of application scenarios and commercial exploration and some firms have not achieved significant technical breakthroughs, with many in the red, the Economic Daily added.

So suspected hype cannot be ruled out, it said, calling on government departments to enhance monitoring and crack down on hyped concepts and share price manipulation.

360 Security announced on April 9 that its AI product matrix 360 Zhinao, developed based on the 360GPT big model, will be open for business clients for alpha testing on April 16.

The Beijing-based company was founded in 2005 and focuses on internet security software. It went listed on the Shanghai Stock Exchange in 2012.

iFlytek will introduce a cognitive intelligence-based smart big model on May 6, Vice President Liu Cong said recently, adding that it will be used for research and development as well as applications in various industrial sectors.

Founded in 1999, the company creates voice recognition software and 10+ voice-based products covering education, communication, music, intelligent toys industries. It went listed on the Shenzhen Stock Exchange in 2008.

iFlytek’s 2022 net profit may have fallen 60% to 70% to between RMB467 million and RMB623 million ($67.9 million and $90.6 million) last year, the Hefei-based company said on January 30. Net profit minus non-recurring profit or loss may have declined 45% to 60% to between RMB392 million and RMB538 million, said Yicai Global.