With AI technology and editorial analysis: Chegg, a leading US edtech company, is facing a severe financial crisis, with its valuation nearing zero. The availability of ChatGPT’s free services and Google’s Gemini AI has caused a significant decline in Chegg’s user base and revenue. Without diversifying its services, Chegg is compelled to implement major staff layoffs, putting the company’s survival at risk.
The widespread adoption of artificial intelligence (AI) technologies and tools has placed many major global companies in jeopardy. Chegg, a renowned educational technology company based in America, is a recent example. Once valued in the billions, Chegg is now on the verge of collapse, largely due to the disruptive impact of AI.
Until a few years ago, Chegg was the first name that came to mind for academic assistance in the United States. The company was considered a major brand in online education and the largest edtech firm in the country. Tens of millions of students used Chegg’s platform for homework solutions, Q&A, and exam preparation. However, the arrival of AI, particularly ChatGPT, has severely challenged Chegg.
Chegg reached its peak in 2021, with an estimated valuation around $15 billion. Since then, it has experienced a rapid decline, with its valuation now close to zero. Chegg’s business model relied on students paying fees for answering their questions. However, ChatGPT’s launch in 2022 brought free AI-powered answers, eliminating the need for paid services. This shift led to a massive drop in Chegg’s users, rendering its subscription model ineffective and causing a substantial drop in revenue. Website traffic plummeted, and the company’s stock price has fallen by 40 to 50 percent.
Google has also presented a major competitive challenge. With AI integrated into Google Search, users receive direct responses without needing to visit external sites like Chegg. Google’s Gemini AI has effectively reduced Chegg’s user base to near zero.
From a commercial perspective, Chegg’s biggest vulnerability was its heavy reliance on homework assistance. As AI tools began offering these services quickly and for free, Chegg’s ability to compete diminished drastically. The company’s failure to diversify or improve its offerings, coupled with its inability to launch its own AI tools, forced students to turn to alternatives like ChatGPT, from which they have not returned. Consequently, Chegg was compelled to carry out massive layoffs, terminating thousands of employees and implementing cost-cutting measures as its financial condition worsened daily.
In 2025, Chegg’s revenue declined by approximately 50 percent with increasing losses. Ultimately, the company’s very existence is now at stake. Chegg’s predicament illustrates the profound challenges that AI technologies pose to traditional technology industries.
