AI's Growing Influence: Over 7,000 Mentions In Q2 Earnings Calls Boost Stocks

There's no doubt that artificial intelligence is earning a spot in the list of groundbreaking technological revolutions, quickly reaching a podium shared by achievements like the internet and the steam engine.

While it's still hard to tell the meat from the hype, a new report is making clear that investors are responding positively to companies embracing AI in their plans, or at least to those raising the AI flag.

This could mean that while AI technology is likely to impact the future in many ways, investors could still be responding to new developments with hyped expectations.

AI Pays Off For Public Companies: A new report by investment platform Wall Street Zen reveals how companies that mentioned AI during their latest earnings calls performed better than those that failed to mention the term.

Mentioning artificial intelligence and related terms — like machine learning or automation — is proving to be one of the most profitable strategies that companies can enact when presenting their quarterly results. That's true at least in the days following an earnings call.

The trend of making artificial intelligence central to a company's projected strategy has been rising exponentially in recent quarters. Alphabet GOOGL GOOG, Microsoft MSFT and Intel INTC topped the list of companies using the term "artificial intelligence" the most times during second-quarter earnings season.

AI-related terms saw record mentions during the second-quarter earnings season, at a total of 7,358 between all companies in the S&P 500. That's 4.6 more times than the previous quarter and 3.3 more times than in the fourth quarter of 2022.

How AI Mentions In Q2 2023 Stack Up: Wall Street Zen looked at the price shifts in the shares of companies three days after their management mentioned AI-related terms in quarterly results. The study looked at data from all of 2022 and the two quarters reported so far in 2023.

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S&P 500 companies that mentioned AI terms had an average stock price rise of 4.6% three days after the call, against an average price rise of 2.4% for companies that did not mention the term.

Two-thirds of the companies that mentioned AI terms had a favorable price three days after the call. That rate was even higher in the tech sector, where 71% of those that mentioned AI terms were priced higher after their calls.

The trend, however, seems to be losing strength. Although the second quarter marked the highest amount of AI mentions in history, only 59% of the companies using the terms were higher three days after their calls, against 80% for the first quarter.

Furthermore, while companies performed better immediately after mentioning the terms, ETFs covering the AI sector have been in decline in the weeks following the latest earnings round.

• Global X Robotics and Artificial Intelligence ETF BOTZ lost 0.56% on Tuesday, but has added 9.5% in the last six months. The fund, however, is following a downward trend since its mid-July peak, losing 11.7% since July 18.
• ROBO Global Robotics and Automation Index ETF ROBO is down 9.5% since its July 18 peak and gained 0.99% Tuesday.
• iShares Robotics and Artificial Intel Mltsctr ETF IRBO has lost 7.8% since July 19 and is down 0.15% Tuesday.

Image created using AI via Midjourney.