What it is
Chatbots use natural language processing (NLP) to understand user input and generate responses. Basic chatbots follow predefined rules or scripts, while more advanced ones, often powered by large language models, leverage machine learning to understand context, learn from interactions, and provide more fluid and human-like conversations. They are typically used for customer service, information retrieval, or conversational interfaces.
Chatbots have become ubiquitous in customer service, sales, and internal company operations, impacting efficiency and labor costs. News often covers new chatbot capabilities, such as those from OpenAI (ChatGPT) or Google (Gemini), which can influence the stock prices of companies developing or integrating them. Their widespread adoption changes how businesses interact with customers and how individuals access information.
Why it matters
Chatbots are a common application of AI, transforming customer service, information access, and how businesses operate, creating new market opportunities.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice