AI mentions rise in S&P 500 earnings calls, Goldman says

By Thomson Reuters Feb 15, 2024 | 10:46 AM

By Lewis Krauskopf

NEW YORK (Reuters) – The number of S&P 500 companies discussing artificial intelligence has climbed to a new high in fourth-quarter conference calls, Goldman Sachs strategists said, in the latest sign AI is a focal point for markets and corporate America.

The proportion of S&P 500 companies mentioning “AI” rose to 36%, up from 31% in the third quarter, Goldman strategists said in a research note published late Wednesday, at which point they said 360 companies representing 80% of the index’s market cap had reported results.

Information technology stayed the sector with the most companies discussing AI, while energy had the largest increase in companies discussing the technology, according to the strategists led by David Kostin.

“Several companies discussed the strong demand for their AI product offerings and services,” Goldman said in the note. “Many companies have also sought to weave AI into existing product offerings to improve the end-user’s experience and drive further demand.”

Companies also noted that spending on capital expenditures and research and development “will likely rise in the near term as they ramp up AI investments,” Goldman said.

The Goldman report is in line with a Reuters analysis earlier in the fourth-quarter reporting season that found AI mentions picking up.

Such management enthusiasm has been reflected in stock performance as well, according to Goldman.

A Goldman stock basket of companies pursuing or enabling AI technology outperformed the equal-weight S&P 500 by 19 percentage points year-to-date as of Wednesday.

Shares of IBM rose to a more than 10-year high late last month after the company gave a better-than-expected revenue outlook backed by strong demand for its AI service.

Chipmaker Nvidia, which has been at the center of the frenzy over AI, has seen its shares soar nearly 50% this year after more than tripling in 2023, becoming the third largest U.S. company by market value, surpassing Amazon and Alphabet.

Nvidia’s quarterly results this coming Wednesday “will be closely watched as a barometer of AI momentum,” Goldman said.

(Reporting by Lewis Krauskopf; Editing by Nick Zieminski)