Artificial Intelligence Discussion a Factor in Stock Performance

Top company executives are mentioning artificial intelligence (AI) this earnings season, which has become a factor in determining companies’ stock performance. According to transcripts analyzed by Bloomberg, there have been around 1,600 mentions of AI by U.S. and European companies in this season’s quarterly conference calls, a record number. 

Interest in AI has soared since the launch of OpenAI’s ChatGPT in November, with technology companies rushing to bring out competing chat tools and microchips to power them. Societe Generale said, “The AI boom and hype is so strong that without AI-popular stocks, the S&P 500 ($SPX) (SPY) would be down -2% this year, not up +8%.” Also, over the past six months, there’s been a +37% increase in assets under management for the top Artificial Intelligence exchange-traded funds.

Mentions of AI are not always a positive factor for some stocks.  For example, in an earnings call earlier this month, Qualcomm (QCOM) CEO Amon talked up the company’s AI prospects, saying it “is uniquely positioned to do AI in a very high performance and low power.” However, the stock still fell due to a disappointing forecast and sluggish smartphone demand.  Also, Chegg (CHGG) plunged almost -50% after warning the ChatGPT tool was threatening growth for its homework-help services.

Citigroup said it is still too early to determine the impact of AI on specific companies right now, although sectors that are most at risk are video games, music, professional publishing, marketing services, and education.  However, “there are a number of instances where the long-term effect of AI-based technology could just as easily be positive for the companies as negative.”

Some companies have benefited more than others from the AI hype.  Nvidia (NVDA), which makes semiconductors used in computers powering AI applications, is up +98% this year.  Also, Palantir Technologies (PLTR) rallied +23% last week after saying demand for its new artificial intelligence tool is “without precedent.”  Alphabet (GOOGL) has jumped more than +9% since unveiling AI tools last week and may have some room to run.  Morgan Stanley said if Alphabet can successfully integrate the new AI features to its products that serve hundreds of millions of people, it should “build further confidence in AI-driven upside to come.” 

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.