AI Dominates Earnings Calls

A new report shows the term “AI” popping up increasingly in earnings reports.

One rising indicator of artificial intelligence’s growth is companies’ quarterly earnings reports. Quarterly reports have historically been a barometer of corporate America’s outlook on the economy and business climate and still remain a bellwether of C-suite sentiment.

That’s proving to be the case with artificial intelligence, which continues to emerge as a talking point in 2024 quarterly reports.

According to fresh data from Goldman Sachs, 41% of U.S. companies mentioned AI 41% in their earnings statements in 2024, both written and verbal. That’s up from 23% in 2023.

It’s not just technology that focuses on AI in earnings reports and subsequent analyst calls. Take the energy sector, where 70% of large-cap energy companies mentioned AI in their most recent quarterly earnings releases, compared to 19% in the previous quarter.

A Huge Talking Point in the S&P 500

It’s not just Goldman Sachs discovering that AI references are becoming a big deal in quarterly earnings releases.

Analytical firm FactSet recently deployed its Document Search (which allows users to search for keywords or phrases across multiple document types) to track AI usage specifically in earning calls from March 15 to May 23 and from all S&P 500 firms. During that time, 199 companies mentioned AI, which is significantly higher than the five-year average of 80 mentions and the 10-year average of 50.

“This is the highest number of S&P 500 companies citing “AI” on earnings calls going back to at least 2014 (using current index constituents going back in time),” said FactSet vice president and senior earnings analyst John Butters, “The previous record was 182, which occurred in Q2 2023.”
“For these 199 companies, the average number of times “AI” was mentioned on their earnings calls was 11, while the median number of times “AI” was mentioned on their earnings calls was 5,” Butters added. “The term “AI” was mentioned at least 50 times on the earnings calls of 12 S&P 500 companies, led by Meta Platforms (95), NVIDIA (86), and Microsoft (74).”

FactSet used its Transcript Assistant tool to listen to CEO earnings calls from March to May. Here’s what FactSet picked up from Microsoft’s April 25 earnings call.

Microsoft’s CEO, Satya Nadella, highlighted the company’s record third quarter, which was driven by the strength of Microsoft Cloud. The company surpassed $35 billion in revenue, up 23%.

He mentioned that Microsoft’s AI offerings, including Microsoft Copilot and Copilot stack, are driving better business outcomes across every role and industry. He also mentioned that Azure continues to gain market share as customers use Microsoft’s platforms and tools to build their own AI solutions.

Nadella also highlighted the company’s strategic partnership with OpenAI, with more than 65% of the Fortune 500 now using Azure OpenAI Service. He also mentioned the company’s Models as a Service offering, making it easy for developers to use large language models (LLMs) and small language models (SLMs) without managing any underlying infrastructure.

Nadella also mentioned the company’s AI-powered features across its low-code/no-code tools, which make it easier to build an app, automate workflow, or create a Copilot using natural language.

He also mentioned that the company’s AI-powered collaborative articles on LinkedIn, which have reached over 12 million contributions, are helping to increase engagement on the platform.

Yes, it’s ironic that FactSet used Generative AI to track companies discussing AI in their earnings calls, but that’s a sign of the times.

But with artificial intelligence looming large over the corporate landscape, it’s telling that AI is on the lips of some of the largest company executives in the world, especially when money is on the line.

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