Separating AI signal from noise

As with many new technologies, excitement and expectations often run well out in front of tangible results. The current set of companies with clearly measurable revenues derived directly from artificial intelligence (AI) is somewhat limited.  Nevertheless, more than a third of companies in the S&P 500 have discussed AI on earnings calls in recent quarters.  Under the assumption that some companies are further along than others in deploying AI, our quantative investing group leveraged natural language processing to filter abstract and vague statements from more definitive signals.  Based on this analysis, the Robeco team found that over the last three years, among those companies that mentioned AI, the proportion providing more concrete examples and statements has risen from 38% during the 4Q20 reporting period to 65% so far in the 4Q23 reporting season.  Time will tell if these AI signals turn into a sustained lift in revenues and earnings.

Source: Robeco, Factset, February 2024

*Note  4Q23 earning reported issued through 21 February 2024