Pakistani-American Founded Chegg Loses 99% Value as AI Disrupts Homework Help Industry

The rapid rise of artificial intelligence is reshaping industries worldwide, and the education technology sector is no exception. Once a dominant player in online learning, Chegg has witnessed a staggering decline, losing nearly 99% of its market value as AI-powered tools transform how students access academic support.

Founded in 2005 and widely used for textbook rentals and homework assistance, Chegg gained massive popularity during the COVID-19 pandemic. At its peak in 2021, the company reached a valuation of approximately $14.7 billion, driven by the global shift to remote learning. However, this growth proved difficult to sustain in the face of rapidly evolving technology.

The turning point came with the emergence of generative AI platforms such as ChatGPT. These tools began offering instant, interactive, and often free solutions to academic queries—services that directly overlapped with Chegg’s subscription-based model. As a result, students increasingly shifted away from paid platforms toward AI-driven alternatives.

This disruption significantly impacted Chegg’s user base, revenue streams, and overall relevance. Reports indicate that by 2025–2026, the company’s market capitalization had plummeted to nearly $150 million, with stock prices dropping below $1—marking a nearly total erosion of shareholder value.

In addition to declining subscriptions, Chegg also faced reduced web traffic due to changes in search behavior. AI-generated summaries and tools integrated into search engines minimized the need for users to visit external platforms, further weakening Chegg’s visibility and reach.

Despite attempts to pivot and integrate AI into its own services, the company struggled to compete with free, widely accessible alternatives. Industry analysts now view Chegg’s decline as one of the most striking examples of how generative AI can rapidly disrupt established business models.

The company’s trajectory highlights a broader shift in the digital economy: services built on providing information or answers are increasingly vulnerable in an era where AI delivers the same instantly and at little to no cost.