Despite all the hype and billions poured into AI, fewer than half of S&P 500 firms actually mentioned it in their Q2 2024 earnings reports.
According to data published this month by FactSet, 42 percent of S&P 500 firms (210) mentioned AI in Q2 earnings calls conducted between June 15 and September 13. FactSet noted that's well above the five- and ten-year averages for mentions of the technology, and just a single corporate mention shy of the record set in Q1 2024.
Breaking that down by sector, the tech industry was naturally at the leading edge of talking about AI – 91 percent of S&P 500 companies in that space referenced it last quarter. The financial, industrial, and healthcare sectors followed close behind.
The reality behind the hype
With mentions of AI only down by a single business in Q2, it's safe to say the rate at which it has been discussed in earnings reports through the first half of 2024 is holding steady – but that's not a great sign, when the hype seems to suggest growth is explosive.
As we've noted of late, AI hasn't yielded much return on investment for the many businesses that have sunk an estimated $1 trillion into developing and implementing it. Reports have also emerged that the cost of AI could easily blow out by 1000 percent, thanks to vendor price hikes and cloud computing bills.
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FactSet's data suggests cost might be a concern for AI users, too. According to its report, S&P 500 entities that mention AI have seen a lower average stock price performance compared to those that didn't mention it. However, looking solely at 2024, companies discussing AI actually have a higher average change in price.
We asked what that suggested about companies investing in AI – other than explaining a correlation between AI investments, financial loss and time – but FactSet told us it doesn't provide commentary, only data.
Either way, those numbers suggest there's still some uncertainty around AI. Six months of interest holding steady suggests no one's getting a foothold.
"The 58 percent number is definitely a half full/half glass sort of point when it comes to AI adoption," DataTrek cofounder Nick Colas, whose firm authored a newsletter on the FactSet data over the weekend, told The Register. "I think it is indicative many companies [are] struggling to understand both how to adopt the technology and how to explain its use cases to investors and Wall Street analysts."
AI adoption expenses are also a valid concern – especially when many large businesses have been in cost-cutting mode for the past year, Colas told us.
Colas and DataTrek expressed a bit more optimism in their newsletter, though. While noting that a lack of mentions from 58 percent of S&P 500 companies calls AI's relevance into question, they suggested it also means there's room for AI providers to expand.
"This data reflects good news for the AI story because, as much hype as this topic has received, it is still not top of mind for many of America's largest companies," DataTrek argued.
With so much growth potential outside the tech sector, all it could take for AI to boom would be for someone to figure out how to get the right tools into the hands of companies outside of tech, noted DataTrek. Success, naturally, is not guaranteed. ®