This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
New AI capabilities can mean instant reversals of fortune.
Something that the language-learning platform Duolingo learned this week, on the receiving end of that novel dynamic.
After the company posted a fantastic quarter, fueling a 30% stock surge, a stroke of bad luck saw it get jolted.
It just so happened that OpenAI debuted its latest model, GPT-5, which demonstrated, among many other things, its ability to create a language-learning tool from a short prompt.
OpenAI researcher Yann Dubois asked the model to create an app to help his partner learn French. And in a few minutes GTP-5 churned out several iterations, with flashcards, a progress tracker, and even a simple snake-style game with a French twist, a mouse and cheese variation to learn new vocab.
The GPT-5 debut instantly wiped out a big chunk of Duolingo’s gains, cutting the 30% gains in half. But the downward momentum continued Friday, with the stock sinking 4% to end the week.
C’est la vie.
The company’s corporate lawyers, of course, did warn against this in its annual 10-K, albeit in boilerplate language. Tucked into the risk factors section, Duolingo notes, “It is possible that a new product could gain rapid scale at the expense of existing brands through harnessing a new technology (such as generative AI).”
Consider this another warning to anyone making software.
There’s also irony in the wild swings. Part of Duolingo’s successful quarter stemmed from the business’s efficient use of AI. Gross margins, the company said, outperformed management expectations due to lower AI costs. And AI conversational features have become part of the company’s learning tools, helping achieve double-digit subscriber growth. Earlier this year, CEO Luis von Ahn shared a memo on LinkedIn outlining his vision to make Duolingo an “AI-first” company.
But the enthusiasm for AI, which led to the initial stock bump this week, also led to the clawback. AI giveth and taketh away.
Duolingo’s roller-coaster ride highlights the risks of competing in the space. Rapid development and fierce competition can leave firms suddenly behind — perceived as under threat, inferior, or obsolete —from every iteration of OpenAI’s models and from the moves of other influential AI players vying to transform computing and productivity.
