Updated August 24, 2023 at 6:30 a.m. EDT|Published August 24, 2023 at 6:15 a.m. EDT
America’s public companies are wholeheartedly embracing the fever of artificial intelligence. According to a thorough analysis by The Washington Post, over 1,000 companies mentioned AI in their quarterly reports this summer, a significant increase from just 36 companies a decade ago. This surge in AI adoption has been driven by tech executives, who compare it to groundbreaking developments like electricity and the internet. The political sphere has also become captivated by AI, with policymakers working on new regulations for this emerging technology. Furthermore, venture capital investment in AI-focused companies has skyrocketed.
Nvidia, a prominent chip company, recently reported better-than-expected earnings due to the AI boom, causing its share prices to soar. However, there are indications that the AI frenzy may be slowing down. The number of users utilizing “generative” AI tools, such as ChatGPT, has been declining in recent months. Venture capitalists are also cautioning entrepreneurs about the challenges and expenses involved in building a profitable AI startup.
Nonetheless, corporate executives across America remain fixated on AI technology. For instance, Ulta Beauty disclosed in its annual report that it utilizes AI for its “virtual try-on and skin analysis tools.” Fidelity relies on AI in its fraud detection toolkit, while Alaska Air uses it to optimize flight paths for fuel efficiency. Medical company Hologic employs an AI algorithm to assist in identifying precancerous lesions and cervical cancer cells. Yum China Holdings, the parent company of KFC and Pizza Hut, intends to leverage AI to enhance the integration between online orders and physical stores.
According to Harvard Business School professor Joseph Fuller, AI has become a “suitcase term” that encompasses a wide range of technologies. It often serves as a buzzword, with companies rebranding existing initiatives as AI-driven to capitalize on the trend. In fact, some companies have even included AI in their names, such as C3 IoT’s rebranding to C3 AI in 2019.
Around one in seven public companies prominently mention AI in their latest annual filings, propelled by the surge in popularity of generative AI tools. Notably, this AI revolution has played a crucial role in driving the stock market rally, with companies like Microsoft and Nvidia at the forefront.
However, AI encompasses much more than just generative tools like ChatGPT and the Dall-E image generator. It encompasses various technologies, including data-driven pattern recognition and prediction. This type of AI usage is prevalent in today’s corporate landscape.
CEOs are striving to stay informed about AI technology to reassure investors while avoiding being perceived as lagging behind. Nonetheless, there are risks associated with AI adoption. Williams-Sonoma, for example, includes advances in AI as a potential intellectual property risk, and Shoe Carnival highlights the challenge of adapting to rapid AI-driven changes. Additionally, many companies, including Adobe and Zoom, express concerns about potential AI regulations disrupting their business models.
While technology companies dominate the AI adoption trend, there has been an increase in financial firms, particularly blank check companies, exploring AI opportunities. Blank check companies, also known as special purpose acquisition companies (SPACs), raise funds to merge with private companies and take them public. After previously focusing on financial trends like cannabis, crypto, and electric vehicles, more of these companies are now joining the AI wave.
It is yet to be determined how much of the AI hype is genuine and will translate into significant advancements. There is incredible enthusiasm and excitement surrounding the role AI will play in the economy. However, as StoneX chief market strategist Kathryn Rooney Vera notes, everyone wants to be associated with AI, whether genuinely involved or simply talking about it.
Note: The Washington Post conducted an analysis of references to “artificial intelligence” in 10-K forms filed with the Securities and Exchange Commission (SEC), using the agency’s Edgar search tool and index files. Only companies within the United States were included in the analysis.
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