By Samuel Shen, Jason Xue and Brenda Goh

SHANGHAI (Reuters) – Chinese state media on Thursday cautioned against risks in chasing local ChatGPT-concept stocks, while domestic artificial intelligence (AI) companies urged investors to be rational after their soaring share prices caught regulators’ attention.

ChatGPT, a chatbot developed by U.S. firm OpenAI and backed by Microsoft Corp, gives strikingly human-like responses to user queries. Frenzy around the technology launched at November-end has seen shares of Beijing Haitian Ruisheng Science Technology Ltd soar 217% this year.

Hanwang Technology Co Ltd has risen as much as 129% as of Wednesday, CloudWalk Technology Co Ltd 128% and TRS Information Technology Co Ltd 66%.

The stocks retreated on Thursday after the state media warning as well as a slump in Alphabet Inc shares that wiped out $100 billion in market value after the Google parent’s ChatGPT rival shared inaccurate information.

In a front-page editorial, the Securities Times highlighted several technological concepts that previously spurred stock buying in China – such as fifth-generation telecommunications networks (5G), augmented reality (AR), virtual reality (VR) and anti-virus garments – the excitement for which has died down.

Though some hotly chased concepts have been successful, “many more new ideas haven’t been commercialised, or require more time to prove,” the state-backed newspaper said.

“However, some people avidly speculate on fake concepts, luring others into schemes of pumps and dumps. Investors eventually end up in tears so they should not follow.”

Companies developing ChatGPT-like concepts have also flagged risks at the request of regulators after their prices shot up amid intense interest in generative AI – technology that can generate new data and media such as text and images.

Beijing Haitian Ruisheng Science Technology said its ChatGPT-style products and services do not yet generate revenue, and that it has no relationship with OpenAI.

Though such technology “is on a long-term uptrend, we need to analyse its speed of growth, and effect, in a cool-headed way,” it said in a filing in response to queries from the Shanghai Stock Exchange.

The company said it expects a roughly 50% slump in 2022 net profit, and admonished investors to be cautious as its valuation is currently much higher than the industry average.

360 Security Technology Co Inc, in response to regulators’ queries, said its self-developed ChatGPT-related technology is still at a nascent stage and is used only internally as a productivity tool.

It is uncertain about when it can market ChatGPT-style products, and how effective they will be, so “we advise investors to pay attention to market trading risks, decide rationally, and invest cautiously.”

Among deep-pocketed Chinese firms joining the latest chatbot race, e-commerce leader Alibaba Group Holding Ltd on Wednesday said it is developing a ChatGPT-style tool, while rival JD.com Inc said it aims to integrate ChatGPT-like technology into some products.

Gaming major NetEase Inc plans to deploy similar “large language model” technology in its education business, a person familiar with the matter told Reuters.