SCHOOLING THE MARKET

(COUR), (CHGG), (DCBO), (PSO), (HMHC), (RENA)

I once thought I was tech-savvy because I could program my VCR. Then I walked into a modern classroom and felt like a caveman who'd stumbled onto the bridge of the Starship Enterprise. 

Kids were interfacing with AI tutors like it was second nature. That's when I realized - the future of education isn't coming, it's already here.

So, forget about those tech bros teaching AI to write haikus or paint like Picasso. That's amateur hour. What I’m looking at is a $404 billion goldmine that's been hiding right under our noses, probably because it was too busy doing its homework. 

I'm talking about the education technology market, and it's about to school us all in the art of making money.

Now, I've seen my share of market frenzies – hell, I rode the Japanese equity derivatives wave back in '89 and surfed the fracking boom in the early 2000s. But this, my friends, is different. 

While the whole edtech scene is poised for a breakout, a particular segment is taking the spotlight: Intelligent Tutoring Systems (ITS). 

Essentially, this technology works like an army of AI tutors, each one smarter than the last, marching into underserved communities armed with personalized lesson plans and infinite patience. 

These digital mentors are doing what an army of human teachers never could – giving every kid a shot at a top-tier education, regardless of their zip code or family bank account. It's like having a 24/7 tutor available anywhere with an internet connection – a lifeline for students in remote or rural areas.

Don't believe me? The numbers don't lie. Studies show these AI tutors can boost student achievement by 10 percentile points on average. 

That's like turning C students into B+ stars overnight. And with Uncle Sam staring down the barrel of a 100,000-teacher shortage by 2025, this scalability isn't just nice – it's necessary.

And the growth of ITS? It's enough to make a calculator blush. The U.S. online tutoring market alone is set to grow at a 12.7% CAGR from 2024 to 2034, hitting a mind-boggling $27.63 billion by 2034. 

So, who is taking the lead here? 

First up, we've got Coursera (COUR). Remember them? The folks who made it possible to take Ivy League courses in your pajamas? Well, they've grown up and then some. 

In 2023, they pulled in a cool $523.8 million. But that's chump change compared to what's coming. They're eyeing the K-12 market with dollar signs in their eyes, salivating over a $114.3 billion feast waiting to be devoured by 2028.

Then there's Chegg (CHGG), the homework helper that's been the secret weapon of college kids everywhere. They raked in $766.7 million in 2023. But here's the kicker - they're not just for frat boys anymore. Their AI tutoring could be the golden ticket for kids in places where "private tutor" sounds as exotic as "personal chef."

And don't sleep on Docebo (DCBO). Sure, they're playing in the corporate sandbox now, but their $169.2 million haul in 2023 is just the opening act. If they can crack the K-12 code, we're talking about a massive payday.

But they’re not the only players in this field. The old guards of education – Pearson (PSO), Houghton Mifflin Harcourt (HMHC), and Renaissance Learning (RENA) – aren't about to be left behind in this gold rush. 

With revenues of $4.99 billion, $1.38 billion, and a $1.1 billion acquisition price respectively, these academic dinosaurs are evolving faster than you can say “Jurassic Park.”

Even the Chinese are getting in on the action. New Oriental Education & Technology Group (EDU) pulled in $3.1 billion in 2023, and they're using AI to turbocharge their tutoring empire.

Now, you might be thinking this is just another pandemic-fueled fad, like sourdough starters or Zoom happy hours. But let me tell you, ITS have been brewing longer than we all thought. 

We're talking roots stretching back to the swinging '60s and '70s, when AI was just a twinkle in a computer scientist's eye. By the '80s, we had SCHOLAR teaching geography like a digital Marco Polo and WHY explaining weather patterns better than your local weatherman. 

These early pioneers paved the way for the more sophisticated systems of the '90s, like Cognitive Tutors, which used cutting-edge cognitive science to model how students think and provide laser-focused feedback.

Fast forward to today, and ITS are everywhere, from K-12 classrooms and university lecture halls to corporate boardrooms and online learning platforms. 

They've become the go-to tool for personalized education, and with advancements in AI, machine learning, and natural language processing, they're only getting smarter and more adaptable.

So, while the pandemic may have accelerated the adoption of ITS, this is a story that's been unfolding for decades. This isn't some flash-in-the-pan trend or a Silicon Valley fever dream. It's a technological evolution that's been simmering longer than a good stock broth, and now it's ready to serve up some serious returns.

After all, we're not just throwing money at the next shiny tech toy here. We're betting on a future where every kid gets a shot at the American Dream, and our portfolios get pumped up like they're on financial steroids. It's a win-win that's rarer than a perfect SAT score.

Class dismissed. Now go make some money.