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A version of this post first appeared on TKer.co
We’ve how, if AI is all it’s cracked up to be, the winners in the stock market should extend currently building the AI infrastructure.
It’s still early, but so far, it hasn’t been clear who’s demonstrably coming out on top in the AI race.
There have been numerous surveys and studies published about how AI is being used. But most fail to separate the ambiguous qualitative discussions from the more tangible quantified wins.
Sparkline Capital’s Kai Wu recently stepped up and this problem. He dug into earnings calls and analyzed mentions of AI adoption. Specifically, he screened these mentions for references to AI-driven economic gains and returns on investment.
“Encouragingly, companies across a wide range of industries are deriving real economic value by applying AI to use cases such as consumer marketing, medical clinic optimization, auto plant automation, social media advertising, customer support, warehouse logistics, storage unit staffing, weapons manufacturing, software coding, supply chain logistics, pharmaceutical R&D, and insurance KYC,” Wu observed in a .
This is good news because we’re not talking about hypotheticals. We’re talking about real gains from deploying AI tools.
“Since 2017, the number of firms reporting AI-driven ROI or economic gains has surged from basically zero to 155 and 675, respectively,” Wu added. “While this still only represents 3% and 15% of our global stock universe, the trajectory is encouraging.”
Notably, he also found that the companies mentioning these gains have seen their shares outperform the market.
“Since 2017, firms merely discussing AI usage on earnings calls have outperformed the market by 3.2% per year,” Wu said. “More importantly, companies able to point to specific AI-driven economic gains or ROI have done even better, earning excess returns of 4.8% and 5.2%, respectively.”
Of course, any number of things can be driving those stock prices. And again, we’re still in the early innings of all this.
But at this point, it’s significant we’re getting tangible evidence of AI’s disruptive power.
Read Wu’s report .
The emergence and embrace of AI technology is leading to both winners and, unfortunately, many losers.
One of the more talked-about losers has been the software business, where AI tools have disrupted the economics of the sector. Why pay licensing fees for third-party tools when you can cheaply develop customized apps in-house with the help of AI?
