via realinvestmentadvice:
The current market speculation surrounding artificial intelligence (A.I.) has garnered everyone’s attention. You can’t turn on a television or pick up a newspaper without a mention of “artificial intelligence.” The “F.O.M.O.” (Fear Of Missing Out) in stocks associated with developing and implementing artificial intelligence is evident. The chart below shows the performance differential between the basket of the big “7” stocks associated with A.I. versus the S&P 500 and the Small/Midcapitalization Russell 2000 indices.
Given that the big “7” are a large part of the S&P 500, the entire returns year-to-date in the broad index have come from just those seven stocks. As noted by Doug Kass recently:
“Taken in a broader context, over 100% of all the gains this year in the S&P Index have been driven by seven stocks. Three of those seven stocks account for 68% of the S&P’s entire yearly gains. Year-to-date, the unweighted S&P Index, has climbed by +9.1%, thanks to a +30% rise in technology, while the Russell Index is -1.0%, and the equal-weighted S&P 500 Index is -1.1% lower.”
Of course, companies are not oblivious to the investor flows into their corporate stock and are jumping on the bandwagon as well to hype the speculation by mentioning “artificial intelligence” in earnings reports and press releases. As shown below, the number of mentions of artificial intelligence has soared in recent months.
“Of these companies, 110 cited the term “AI” during their earnings call for the first quarter. This number is well above the 5-year average of 57 and the 10-year average of 34.
In fact, this is the highest number of S&P 500 companies citing “AI” on earnings calls going back to at least 2010 (using current index constituents going back in time). The previous record was 78, which occurred in the prior quarter (Q4 2022).
At the sector level, the Information Technology (38), Industrials (17), and Communication Services (15) sectors have the highest number of S&P 500 companies citing “AI” on Q1 earnings calls, while the Communication Services (75%) and Information Technology (66%) sectors have the highest percentages of companies citing “AI” on Q1 earnings calls.” – FactSet
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