Artificial intelligence is a red-hot issue, and not just for tech leaders like Elon Musk.

Educators are split over how the technology will impact student learning and outcomes, and many parents are concerned about the impact of the technology on their child’s well-being.

But the truth is, young people are already utilizing AI in schools and in social circles.

Two publicly traded companies sharpened their AI skills with hopes of boosting their userbase and increasing revenue: Snapchat (SNAP) and Chegg (CHGG).

Shares of both companies have plummeted over the last 2 years:

Earlier this week, Chegg issued a loud warning to investors, showcasing how new technology can completely disrupt a business model.

Is Snapchat in the same boat?

Here’s what we’re watching…

Chegg (CHGG) can’t compete with Free ChatGPT

About a month ago Chegg announced it would leverage ChatGPT to power CheggMate, a study aide tailored to students. The tool aims to personalize practice tests and guide study -- and will be available soon for free initially.

The problem for Chegg: it’s too late!

Students have had months to learn and master already available ChatGPT – and why would they pay for a toned-down service when they can get better milk for free?

Members can track the adoption of CheggMate in real time and expect updates post-roll out – but the initial look is not positive for the company’s business model.

Luckily for Snapchat, the company finds itself if a different position.

Snapchat’s (SNAP) AI is helping with homework; may have advertising potential

Snapchat’s "My AI" chatbot powered by OpenAI is now available to all of its 750 million monthly users for free.

The large-scale release was met with confusion and some “creepy” negative feedback from users. It’s partially how we nailed a bearish SNAP call ahead of earnings last week.

In qualitative review of SNAP’s AI integration, we are starting to see some positive feedback from already engaged users noting some useful applications, like homework.

Looking ahead, we’re tuned in to whether or not SNAP’s AI integration proves meaningful to users – as in, meaningful enough to increase engagement.

For example, Snap is integrating My AI into Snapchat's features, allowing it to make recommendations for AR filters and places to visit on the map. Soon, users will be able to send visual messages to My AI and receive generated responses, such as images.

Snap CEO Evan Spiegel sees generative AI bots as more suited for creative tasks, rather than recalling specific information. He remains tight-lipped about My AI's potential impact on Snap's advertising business. However, he sees it as a critical part of Snap's future and says that more than 2 million chats per day are already happening with My AI.

Snapchat’s already-engaged userbase and unrelated-to-AI social applications help to distinguish this company from a name like Chegg.

Bottom line: Snap needs all the help it can get to keep users engaged, attract new downloaders, and lure back advertisers.

We’ll be tracking Snapchat AI mentions for confirmation of sentiment normalization and long-term adoption.