Artificial intelligence is a rapidly growing technology that has created excitement across industries, from fast food to theme park. Executives are eager to demonstrate how they will benefit from the new technology.
However, a review of their regulatory filings suggests that much of what they say is just talk.
Alphasense data shows that almost 40% of blue-chip S&P 500 companies mentioned AI in their earnings calls during the last financial quarter.
In their regulatory filings, less than 16% of companies mentioned AI. This shows that AI has not yet had a significant impact on the majority of businesses.
The joke was that you only had to say “AI” last quarter and your stock would immediately pop, said Bryant VanCronkhite. He is a senior asset manager at Allspring Global Investments.
Some companies claim to be doing AI, but they are really trying to understand the basics of automation. He said that the pretenders would be exposed at some point.
It is obvious that executives are motivated to engage in the AI discussion. The majority of this year’s US stock market rise has been attributed to the seven largest AI-linked technology groups. The chipmaker Nvidia is due to release its latest results this Wednesday. It has led the market with a rise of over 200 per cent.
Investors are also on the lookout to see if the new technology could disrupt existing business models. In May, the maker of online learning guides Chegg warned that AI chatbots like ChatGPT were hurting their sales.
Even industries that are not known for their technological innovation have been influenced by the trends.
Ralph Lauren, the fashion and apparel company, said earlier this month that AI was “really important to our business”. . . revenue growth journey”. Chipotle and Yum Brands, the owners of KFC, have embraced AI technology to help improve ingredient ordering or tortilla chip production.
Marriott and Norwegian Cruise Line, two tourism-related companies, have said that they are developing AI-powered systems in order to improve the efficiency and personalisation of processes such as reservation booking.
Ralph Lauren’s annual report from May did mention some broad initiatives, but none of the examples mentioned above specifically referenced AI.
It does not mean that companies are simply trying to get attention by jumping on the AI bandwagon. It highlights for investors the difficulty of separating hype and real potential. And that it will take time to see the full impact of AI.
VanCronkhite, Allspring’s VanCronkhite, said that he invested in Wendy’s which is testing new drive-through order machines that are powered by Google’s AI.
VanCronkhite stated that when you consider the economics of this business, the availability of labour and the costs as well as the quality are the most important issues. You’re talking to a computer, but it sounds like you. The ‘person,’ however, is not grumpy or tardy to work. It is also very good at cross-selling.
Rob Arnott of Research Affiliates Asset Managers said: “Do you believe the hype around AI?” Yes, I do. It’s going to be a huge event. Do I think it will happen over night? Heavens no.”