A robot showcasing its piano skills at the Apsara Conference, a prominent event focused on cloud computing and artificial intelligence in China, on October 19, 2021, indicates the growing momentum of AI development. While China is redefining its regulations for the tech industry, the European Union is also working on its own regulatory framework to govern AI, although it is yet to be finalized.
This surge in artificial intelligence has captivated Wall Street in the year 2023. The frenzy began last November when OpenAI released its widely acclaimed large-language model called ChatGPT. This advanced tool demonstrated remarkable capabilities, sparking a competition in the AI space, with Google also introducing its own chat box, Bard AI, just a few months later.
The enthusiasm for AI extended even further, with investors rushing to invest in companies that offered substantial AI exposure. Stocks such as C3.AI, chipmaker Nvidia, and even Tesla experienced impressive gains, defying the overall strained macroeconomic climate.
Similar to the trends surrounding “blockchain” and “dotcom,” AI has become the latest buzzword that companies eagerly want to associate with. Some companies, despite lacking a historical background in AI, have begun extolling the technology’s potential during conference calls with analysts and investors.
For instance, Kroger, a prominent supermarket chain, has positioned itself as a “technology leader” with a rich history, according to its CEO Rodney McMullen. McMullen highlighted how AI could revolutionize customer surveys and enable Kroger to swiftly implement data-driven insights in its stores. As a result, Kroger’s stock has seen a modest increase of just over 4% since the beginning of the year.
During their earnings call on June 15, McMullen emphasized the significance of robust, accurate, and diverse first-party data in maximizing the impact of AI, innovation, and data science. He asserted that Kroger is well-prepared to embrace these innovations and enhance the customer and associate experience.
Similarly, Tyson Foods, the second-largest global producer of chicken, beef, and pork, sees potential benefits in leveraging the surge of investment and excitement surrounding AI. However, CEO Donnie King did not provide specific details regarding how AI would factor into the company’s future or which areas of the Tyson business would be impacted. Consequently, Tyson Foods’ stock has declined by more than 20% since January.
During their earnings call on May 8, King mentioned the company’s continuous efforts to enhance their digital capabilities through digitized standard operating procedures, data utilization, automation, and AI technology for decision-making.
Johnson Controls, a leading producer of heating, ventilation, and air conditioning (HVAC) equipment, believes that AI can offer a strategic advantage during volatile macroeconomic conditions. CEO George Oliver alluded to the potential benefits of AI without elaborating further on its specific role, aside from mentioning its potential as a valuable tool in addressing declines in orders. Consequently, Johnson Controls’ stock has experienced a modest gain of 2.2% since January.
Oliver expressed his belief that AI will enable the company to expand its services regardless of the economic cycle, during the earnings call on May 5.
As Wall Street progresses into the second half of the year, the promise of AI continues to drive stock prices higher. In comparison, the tech-focused Nasdaq Composite has recorded a roughly 16% increase since January.
However, amid the transformative potential of AI that could disrupt various industries and automate millions of jobs, it will be investors who ultimately determine the legitimate beneficiaries versus those capitalizing on the hype.
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