AI Daily: FTC launches inquiry into AI companion chatbots

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

INQUIRY: The Federal Trade Commission is issuing orders to seven companies that provide consumer-facing AI-powered chatbots seeking information on how these firms measure, test, and monitor potentially negative impacts of this technology on children and teens. The FTC inquiry seeks to understand what steps, if any, companies have taken to evaluate the safety of their chatbots when acting as companions, to limit the products’ use by and potential negative effects on children and teens, and to apprise users and parents of the risks associated with the products. “Protecting kids online is a top priority for the Trump-Vance FTC, and so is fostering innovation in critical sectors of our economy,” said FTC Chairman Andrew N. Ferguson. The FTC’s order targets Alphabet (GOOGL), Instagram, Meta Platform (META), OpenAI, Snap (SNAP), xAI, and Character Technologies. The FTC is interested in particular on the impact of these chatbots on children and what actions companies are taking to mitigate potential negative impacts, limit or restrict children’s or teens’ use of these platforms, or comply with the Children’s Online Privacy Protection Act Rule.

AI COMPUTE DEMAND: DA Davidson upgraded Nvidia (NVDA) to Buy from Neutral with a price target of $210, up from $195, citing the belief that the growth in AI compute demand will drive enough demand to sustain growth into next year and likely beyond. The firm’s “increasingly optimistic view” of the growth in AI compute demand supersedes its concerns about crosscurrents it has highlighted in the past, including the increased competition from customers through ASICs, especially Google’s (GOOGL) TPUs and increased competition and volatility in demand in China, DA Davidson tells investors.

ON THE SIDELINES: Jefferies initiated coverage of Palladyne AI (PDYN) with a Hold rating and $8 price target. The refinement of Palladyne’s Foundational AI/ML software has supported the development of two unique software offerings to add human like ability to robots and drones, but the firm wonders “Is it A Drone, Industrial or AI Play?” Jefferies’ baseline assumption of a 67% revenue compound annual growth rate supports a current share price of $8 with “high option value.”

OWN CHIPS: Alibaba (BABA) and Baidu (BIDU) have started using internal chips for their artificial intelligence models, partly replacing AI chips made by Nvidia, Qianer Liu of The Information reports, citing four people with direct knowledge of the moves. U.S. export controls have reduced the power of the chips that Nvidia could sell in the Chinese market, the website points out. Chinese business is likely to shrink more than it already has, The Information predicts.