The Impact of Artificial Intelligence Exposure on Publicly Traded Firms

Pete Kozak |

The whitepaper titled “Generative AI and Firm Values” by the National Bureau of Economic Research (NBER) examines how new computer programs that can create things on their own (Generalized Artificial Intelligence and Generative Pre-Trained Transforms [GPT]) affect the value of companies. The study looks at companies that are traded in United States domestic stock markets. The researchers found that companies whose workers utilize these new computer programs more often than other companies make more money. Specifically, companies with higher exposure to Generative AI earned excess returns that are on average 0.4% higher on a daily basis than the returns of firms with lower exposures to artificial intelligence following the release of ChatGPT. This is because these companies can create things faster and cheaper than other companies. However, not all companies benefit from these new computer programs in the same way. Some industries benefit more than others. For example, generative AI is impacting the automotive, aerospace, defense, medical, electronics and energy industries by composing entirely new materials targeting specific physical properties (material science). AI can help companies improve their products in many ways. For example, AI can help companies personalize customer experiences, optimize processes, and modify existing production methods.

Some examples of AI improvements include:

  • Thread uses AI to tailor fashion recommendations.
  • Sesame Street personalizes early learning with AI.
  • Hilton Hotels uses AI robot to greet guests.
  • Under Armour personalizes fitness recommendations with AI.
  • Rare Carat creates first AI-powered jeweler.
  • Macy’s On Call directs customers in store.
  • Levi’s creates a virtual stylist with AI.
  • FaceID on iPhones.
  • The search algorithm on Google.
  • The recommendation algorithm on Netflix.
  • Social media content recommendations.
  • Ride-hailing apps such as Uber.
  • Development of autonomous vehicles.
  • Facial recognition software.
  • Virtual assistants like Amazon’s Alexa and Apple’s Siri.
  • Industrial applications in all industries from farming to manufacturing to healthcare.