The rise of artificial intelligence (AI) has been a hot topic in the technology industry for years. But it is not just tech companies that are talking about it on their earnings calls. A recent Marketwatch analysis of corporate earnings call transcripts found that the amount of discussion time devoted to AI has skyrocketed in recent years, even for companies that do not have a direct connection to the technology.
Executives and analysts are mentioning AI or artificial intelligence more often in their earnings calls than ever before. In 2023, the topic of AI was brought up in 280 calls, roughly the same number of calls as during the same period in 2022. However, the amount of time devoted to discussing AI has increased significantly, with executives and analysts mentioning AI or artificial intelligence 1,770 times during those calls, up from 1,006 the prior year.
The trend is not limited to companies where AI could be a game-changer. Even companies in sectors such as natural gas, restaurant management, and apartment management are finding ways to work AI references into their earnings calls. For example, Range Resources referenced production-enhancing algorithms, Applebee’s owner Dine Brands Global mentioned AI-powered call centers, and Equity Residential justified slow-recovering markets in Seattle and San Francisco on the basis that they are home to “AI and other innovations.”
The rise of AI buzz is not going unnoticed. The Federal Trade Commission (FTC) has warned that if marketers think they “can get away with baseless claims that your product is AI-enabled, think again.” While the FTC’s concern is antitrust and consumer protection, investors should take note that overhyping the use of AI could have consequences for companies.
So why are companies so eager to talk about AI on their earnings calls, even if their core business has little to do with the technology? The answer is simple: AI is hot. It is a buzzword that investors and analysts are interested in hearing about, and it can help to drive up a company’s stock price. But while it may be tempting to jump on the AI bandwagon, companies should be careful not to overhype their use of the technology.
For companies that are genuinely using AI to transform their business, there is a real opportunity to differentiate themselves from competitors. However, companies should be transparent about how they are using AI and the benefits it is providing. Investors are looking for companies that can demonstrate real ROI from their use of AI, not just those that are talking about it for the sake of driving up their stock price.
In conclusion, the rise of AI buzz is affecting corporate earnings call transcripts across industries. While it may be tempting for companies to jump on the AI bandwagon, they should be careful not to overhype their use of the technology. For companies that are using AI to transform their business, there is a real opportunity to differentiate themselves from competitors. However, transparency about the use of AI and the benefits it provides is key. Investors are looking for companies that can demonstrate real ROI from their use of AI, not just those that are talking about it for the sake of driving up their stock price.
