CS Insights: AI Remains a Hot Topic on Q2 Earnings Calls

Scott Bisang

June 2024

Executives and analysts love to talk about Artificial Intelligence (AI). References to the latest developments in AI reached another record high during the last round of earnings conference calls in the U.S. We’ve observed a steady increase in AI references on public company earnings calls over the past three years, with the pace accelerating in 2024.

Generative AI is one of the most common phrases executives use, followed by natural language processing (or natural language capabilities), machine learning and AI agent.

While AI references happen in every industry, they’re especially prominent in Software, Professional Services, Semiconductors, IT Services and Media.

Perhaps the biggest beneficiary of all this AI airtime is Nvidia. The media frequently highlights the tech company’s incredible stock run as it benefits from massive investments in AI computing power. But companies also can’t resist talking about Nvidia, which was referenced by nearly 70 other public companies during earnings calls this past quarter, the highest number to date.

The AI Platform Garnering the Most Attention on Earnings Calls

There is a massive race in the tech industry to deploy AI solutions and tools.

If you’re judging based on public company commentary, it appears OpenAI has jumped out to an early lead, with Microsoft’s CoPilot quickly catching on. In a distant third is Google’s Gemini (fka Bard), followed by Anthropic, the startup founded in 2021 by former OpenAI employees.

Q2 marked the first quarter in which CoPilot garnered more public company references than OpenAI.

Investors and Management Teams Continue to Talk Less About the Economy and a Recession

The“ Uncertainty Index” – the number of references to an uncertain economic environment on U.S. earnings calls – continues to drop, reaching a two-year low in the second quarter. Negative commentary about the economic outlook declined approximately 24% from Q1 of this year and 59% from Q2 2023.

Similarly, mentions of the word “recession” also reached a two-year low, declining to the lowest number since Q1 2022. Recession mentions have dropped at a brisker pace this year, decreasing by 35% sequentially and 73% YoY.

The industry still talking the most about a recession? Financial services. Banks and capital markets providers highlighted their strength and resiliency in the event of a downturn more than any other industry, though, they still discussed the topic less than they had in prior periods.

Tariffs Jump Back into the News, Foreshadowing an Increase for Q3 Earnings Calls

The Biden Administration unveiled new tariffs aimed at Chinese manufacturers on May 14, late in the Q2 earnings call cycle and after most companies in the U.S. had reported.

The tariffs, which impact steel and aluminum, semiconductors electric vehicles, solar panels, critical minerals and lithium-ion EV batteries, among other items, were raised on a few calls that followed the announcement.

We expect the topic to become more prevalent in Q3 as the 2024 Presidential Election season heats up and more company executives face analysts questioning the financial impact of the tariffs.

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