Companies Attempt to Cash in on Artificial Intelligence Hype

With the arrival of OpenAI’s ChatGBT in November, companies from Meta Platforms to Home Depot are mentioning artificial intelligence (AI) in their earnings calls to hype their stocks.  As a result, references to AI and related terms during earnings calls this reporting season is up 77% from a year earlier as companies attempt to cash in on the hype.

Many stocks have already benefited from the hype surrounding AI.  Nvidia (NVDA), which makes the chips needed for complex AI computing tasks, is up more than 58% this year and is one of the best-performing mega-cap stocks.  Also, obscure companies with AI in their names have skyrocketed.  BigBear.ai Holdings (BBAI) has surged more than 300%, and C3.ai Inc (AI) and BuzzFeed (BZFD) have more than doubled.

Quite a few companies tossing around the phrase AI are doing it to take advantage of the hype.  AJ Bell Plc said, “it is impossible to quantify what the impact of AI could be and equally possible that a wave of enthusiasm carries stocks with expertise in or exposure to AI, no matter how tenuous, higher and higher.”

Some companies are already attempting to use AI in their advertising plans.  Alphabet (GOOGL) is using AI to help anticipate the intent of users’ queries on Google, and CEO Schindler said AI is also used to increase consumer interactions with ads.  CEO Zuckerberg of Meta Platforms (META) said his company is investing more heavily in AI to develop privacy tools and help advertisers serve more “relevant and engaging” ads.  CEO Read of WPP Plc, the world’s largest advertising group by revenue, said that adding AI can help find relevant audiences and measure the impact of the company’s work.

Not all companies have embraced the AI hype.  Some companies, such as Citigroup, Deutsche Bank AG, and Goldman Sachs Group, are among those that have recently banned employees from using the ChatGBT chatbot. Some analysts say the AI frenzy bears the hallmark of the cryptocurrency craze that took Wall Street by storm a few years back.  However, Roundhill Investments said there are some big differences between AI and other short-lived crazes.  The returns from AI are “more tangible and more real, and it’s happening right now.” 

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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.