Companies that discussed generative artificial intelligence (GenAI) in their earnings calls before the technology became mainstream saw their stock prices increase significantly, according to a new analysis of over 22,000 corporate transcripts. The research reveals a direct link between how a company communicates its AI strategy and its performance in the stock market, rewarding early and concrete discussions about technology adoption.
Key Takeaways
- A study of S&P 500 firms from 2014-2024 found that early discussion of GenAI was linked to higher stock returns, independent of immediate earnings forecasts.
- Mentions of GenAI in earnings calls surged after the launch of ChatGPT in late 2022, particularly in the information technology sector.
- Investors responded more positively to discussions about AI adoption and implementation rather than speculative opportunities.
- Firms that discussed AI early saw a 0.62% rise in quarterly stock prices for every one percentage point increase in GenAI-related conversation.
Analyzing Corporate AI Communication
Researchers developed a new method to measure how corporate communication about emerging technologies influences investor behavior. By analyzing 22,000 earnings call transcripts from S&P 500 companies over a ten-year period (2014–2024), they were able to quantify corporate focus on GenAI.
This approach, part of a field known as sentometrics, applies statistical methods to text to extract quantitative data. The study measured "GenAI exposure," defined as the proportion of each earnings call dedicated to AI-related topics. This allowed for a systematic evaluation of how markets react to corporate messaging on technology.
The Surge After ChatGPT
The analysis identified a clear turning point in corporate communication following the public release of ChatGPT in late 2022. Mentions of GenAI increased sharply across the board, but the change was most pronounced in the information technology sector.
According to the data, GenAI exposure in the tech sector jumped from an average of 1.3% in 2022 to 5.0% in 2023. Other sectors, including Communication Services and Consumer Discretionary, also showed a notable rise in AI-related discussions. This indicates a broad-based corporate response to the technology's growing prominence.
From Opportunity to Implementation
The study also observed a shift in the nature of these conversations over time. Initially, many discussions centered on the potential opportunities presented by GenAI. However, after ChatGPT's release, the focus moved toward practical adoption and implementation strategies, especially within technology companies.
Early Engagement Linked to Higher Returns
One of the most significant findings is that companies engaging with AI topics early on reaped substantial market benefits. The research identified a group of firms, labeled "Early Exposed," that were discussing GenAI before it became a mainstream topic. These companies experienced superior stock market performance.
Statistical analysis revealed a strong correlation: a one percentage point increase in the share of an earnings call devoted to GenAI was associated with an average quarterly stock price increase of 0.62%. This suggests that investors were actively seeking and rewarding companies that demonstrated foresight and a proactive stance on AI.
Quantifying the AI Premium
For the "Early Exposed" firms, their proactive communication about AI accounted for a substantial portion of their stock gains in 2023. The study estimates that roughly one-third of the equity returns for these companies could be attributed directly to their discussions about generative AI, highlighting a clear "AI premium" rewarded by the market.
The effect was even more pronounced for firms that not only started early but also maintained a consistent focus on the topic. The analysis found that investors favored companies that positioned AI as a core component of their strategy for maintaining a competitive advantage and driving future growth.
The Importance of Tone and Topic
The study went beyond simply counting mentions of AI. Using advanced text analysis, it categorized the content of the discussions into three primary themes: Opportunity, Adoption, and Risk. This allowed for a more nuanced understanding of what investors value most.
Adoption Trumps Opportunity
Investors responded differently depending on the theme of the discussion. While talk of AI opportunities was viewed positively, conversations centered on concrete adoption plans had a stronger impact on stock prices.
- For "Early Exposed" firms, a 1% increase in discussion related to AI adoption was linked to a 0.63% quarterly excess return.
- In contrast, a 1% increase in discussion about AI opportunities resulted in a 0.45% quarterly excess return.
This difference indicates that the market places a higher value on tangible implementation plans than on speculative or forward-looking statements. Investors appear to reward companies that can demonstrate they are actively integrating AI into their operations, not just exploring its potential.
The stronger effect for adoption suggests markets rewarded more discussions about implementation over speculative opportunities.
A Versatile Framework for Market Analysis
The authors of the study, Michele Ca' Zorzi, Gianluigi Lopardo, and Ana-Simona Manu, note that their analytical framework has applications beyond AI. The same methodology can be used to track corporate attention and sentiment across a wide range of global events and risks.
For example, the tool can measure corporate exposure to issues such as Brexit, the COVID-19 pandemic, inflation, geopolitical tensions, and climate change. This provides policymakers, investors, and analysts with a real-time method for monitoring how major global shifts are perceived and discussed within the corporate world.
By quantifying qualitative information from earnings calls, this approach offers a powerful lens for understanding market dynamics and evaluating how emerging trends impact firm valuations and the broader economy.
