Mere mention of AI raises companies’ stock price - study

Adobe, Meta, and Nvidia were among top S&P 500 companies that saw their stock prices skyrocket in three days after mentioning artificial intelligence (AI) in their earnings calls, a new study says.

Adobe, the company behind image editing software Photoshop, saw its stock price increase 38.2% in three days after mentioning AI in its quarterly earnings call, according to research from Storible and WaltStreetZen.

This was the biggest increase among the 500 largest companies listed on the US stock exchanges. Research suggests AI hype is partly behind Adobe’s success in stock markets. The San Jose-based company reported its highest-ever total revenue in the third quarter of 2023.

Other tech companies that benefited from discussing AI in their earnings call include Facebook and Instagram parent Meta, which saw its stock price jump by 37.6%, and chip-maker Nvidia, which increased by 26.3%.

All three tech juggernauts discussed AI in positive terms in their calls with investors. Adobe mentioned the technology 33 times, Meta 108 times, and Nvidia 150 times in the transcripts used for the analysis.

Interestingly, some companies that mentioned AI in negative terms still saw their stock price increase. These include IT company Fortinet, whose stocks appreciated 27.5% despite only mentioning AI twice in its earnings call, in both cases negatively.

Companies that did not benefit from mentioning AI in their earnings call include cosmetics giant Estée Lauder, which saw its stock price drop 17.1% after a single – positive – mention of AI in its earnings call. Payments company PayPal saw it decrease by 15% despite 15 positive mentions of AI.

Tech companies benefited more than non-tech from AI mentions in their earnings call, with 71% recording a positive change in stock value as opposed to 65%, according to the study.

Overall, most companies benefited from hyping up AI, with 67% seeing a positive change in their stock value, which rose by 8.5% on average. Companies that mentioned AI saw an average stock price increase of 4.6%, almost double that of companies that didn’t.

The study only analyzed price changes in the three-day period starting from when the transcript of the earnings call was published on one of the two online depositories, namely, Motley Fool and Seeking Alpha.

Researchers based their analysis on transcripts spanning the first in 2022 to the third quarter in 2023. AI mentions reached an all-time peak of 7,358 in the second quarter of this year, the study noted, an increase of 366% from the previous quarter.

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