AI talk is surging during company earnings calls - and so are those companies' shares

By Joy Wiltermuth

S&P 500 companies citing 'AI' on Q4 earnings calls saw an average stock-price increase of 28.6% in the past year, according to FactSet

Company executives in the fourth quarter produced the second-highest amount of talk about artificial intelligence for any quarter in at least a decade, according to a tally from FactSet.

But while talk can be cheap, the tech executives mentioning AI the most also have been showing their shareholders the money over the past 12 months.

There were 179 mentions by S&P 500 companies of the term "AI" during fourth-quarter earnings conference calls - second only to 181 instances in the second quarter of 2023 when looking back to earnings from at least 2014, according to FactSet's document-search tool.

While shares of AI goliath Nvidia Corp. (NVDA) were 0.1% lower on Friday - adding to a recent pullback among shares of megacap technology companies - Nvidia, the top talker about AI in the fourth quarter, has seen its stock climb 262.5% in the past 12 months, according to FactSet.

Smaller yet still major advances were also made over the past year by shares of Salesforce Inc. (CRM), Cadence Design Systems Inc. (CDNS), Alphabet Inc. (GOOGL) (GOOG), Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Hewitt Packard Enterprise Co. (HPE), Broadcom Inc. (AVGO) and Arista Network Inc. (ANET) - all of which mentioned AI at least 50 times during their fourth-quarter calls, according to FactSet.

The release of OpenAI's ChatGPT in November 2022 has been widely viewed as a turning point for artificial-intelligence applications, galvanizing millions of individuals to sign up for the platform and also sparking a craze in AI-related stocks on Wall Street.

"For S&P 500 companies that cited 'AI' on Q4 earnings calls, the average change in price since March 15 (2023) is 28.6%," wrote John Butters, senior earnings analyst at FactSet. Butters noted that the average gain for companies in the index that didn't mention AI on their fourth-quarter calls was 16.8%.

Stocks closed lower Friday as the tech sector retreated. For the week, the Dow Jones Industrial Average DJIA ended slightly down, while the S&P 500 SPX slipped 0.1% and the tech-heavy Nasdaq Composite COMP shed 0.7%, according to FactSet.

-Joy Wiltermuth

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03-16-24 0700ET

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