Mention AI in earnings calls ... and watch that share price leap
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Readers may have noticed there's a great deal of interest in AI at the moment but can the merest mention of those two letters drive up a company’s share price? The answer seems to be yes.
Here at The Register, we’ve seen a noticeable uptick in the number of PR pitches involving artificial intelligence, whether that is products for creating or running AI models, AI services, or AI being infused into existing tech like pixie dust sprinkled everywhere in an attempt to add some pizzazz to a jaded portfolio.
Everyone, it seems, is very keen to jump on the bandwagon to such an extent that it's starting to put us in mind of the South Sea Bubble or the tulip mania of the Dutch Republic. However, there is perhaps method in the tech execs' madness.
According to stock market research outfit WallStreetZen, companies that mentioned AI in their earnings calls saw an average increase in their stock price of 4.6 percent, compared with an average stock price rise of only 2.4 percent for companies that didn't mention the magic letters.
WallStreetZen said it gathered the quarterly earnings call transcripts of S&P 500 companies from between Q1 2022 and Q2 2023. It then counted the number of mentions of AI and related terms such as machine learning or robots during the calls, and analyzed each AI-related statement using SentiStrength, a sentiment analysis tool.
Next stop was looking at the three-day change in the price of each company's stock, beginning with the date the transcript was released.
Overall, 67 percent of companies whose execs mentioned AI on the earnings call saw a rise in the stock price. Among tech companies, the figure was 71 percent of companies, with an average increase of 11.9 percent, according to WallStreetZen.
Adobe, Meta, and Nvidia are among the top companies whose stock prices increased the most after mentioning artificial intelligence, with Nvidia's stock increasing by 26.3 percent after AI was mentioned 150 times in their earnings calls.
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The number of AI mentions in earnings calls during the second quarter of this year has increased by 366 percent compared to the prior quarter, WallStreetZen claims.
This gratuitous peppering of earnings calls with mentions of AI had already been noted by The Register, with a report from July noting that during Microsoft's results confab for Q4 of its fiscal 2023, AI was referenced no fewer than 175 times.
But it doesn't stop there. AI is supposed to have played its part in Arm's glittering return to being a (partly) publicly traded company, with its share price hitting a high of $69 after opening at $51 yesterday.
This is despite Arm not particularly being an AI company in any meaningful way, although that didn't stop CEO Rene Haas from making statements such as "it's impossible to build AI without Arm," and Softbank's CFO claiming that Arm is "in the leading position of the artificial intelligence revolution."
Other companies have also seen their share prices boosted by the fact that they supply hardware used in AI processing, as we noted of Dell and Samsung, although the obvious leader here is Nvidia with its GPUs that are like gold dust at the moment.
Worryingly, some of the hype around AI seems to involve replacing humans with algorithms, and some publishers have even gone as far as to have AI produce some of their content for them, such as the Daily Mirror and tech site CNET. But fear not, we can reassure readers that the content here at The Register is written by sentient beings. Mostly. ®