According to Inc, a record 306 S&P 500 companies mentioned “AI” on their earnings calls in the latest quarter. That’s a six-fold increase from the quarter before ChatGPT launched in November 2022. Despite that surge, nearly 40% of companies in the index still aren’t discussing AI with shareholders. The data from FactSet shows that just talking about AI has been a leading indicator for stock returns over the last year. DataTrek Research co-founders Nick Colas and Jessica Rabe call this the “AI trade writ large,” where companies with a reason to discuss AI tend to have better-performing stocks. Sector breakdowns show 95% of tech and communications firms mentioned it, while over 64% in financials, real estate, and industrials did.
The Hype Tax
Here’s the thing: this data creates a perverse incentive. We’re basically telling corporate leaders that their stock might get a short-term bump just for saying the magic letters “A” and “I” to Wall Street. That’s a dangerous game. It pressures companies to fabricate a narrative or force-fit AI into their strategy just to appease investors looking for the next big thing. And let’s be honest, how much of this “discussion” is substantive versus just buzzword bingo? Saying you’re “exploring AI use cases” or “leveraging AI for efficiency” is vague enough to check the box without committing to anything. The market is rewarding the talk itself, which feels like a bubble indicator.
The Substance Problem
But Colas and Rabe hit on a critical point. For a huge chunk of the S&P 500, AI probably isn’t material yet. They note it may be a long-run consideration but doesn’t drive current revenue or strategy. So, the 40% who are silent might be the responsible ones! They’re avoiding hyping something that doesn’t yet impact their fundamentals. In sectors like utilities, consumer staples, or materials—where the tech adoption cycle is slower—what is there to say? Forcing the conversation could be more damaging than staying quiet. The real question is: when this initial hype wave passes, will the stocks of the “talkers” without real plans crash back down?
Sector Reality Check
The sector data is telling. Of course 95% of tech companies are talking about it—it’s their entire world. It’s their product, their marketing, their future. But in industrials or manufacturing? The implementation is harder, slower, and often involves integrating AI into physical processes and legacy hardware. It’s not just a software update. For companies in these spaces, the real competitive edge isn’t in the earnings call script; it’s in deploying robust, reliable computing at the edge, in factories, and on the shop floor. This is where the physical meets the digital, and it’s a much tougher puzzle to solve than launching a chatbot feature.
The Long Game
So what’s an investor—or a company—to do? This creates a nasty tension. Stay quiet and watch your stock underperform the “AI talk” crowd, or start talking and risk creating expectations you can’t meet. I think the companies that will win are the ones who can bridge that gap. They’ll offer a specific, credible narrative about how AI integrates into their existing business and then deliver on it. The ones just slapping the label on for a stock boost will get found out. Eventually, the market will demand to see the actual impact on the P&L. The “AI trade” based on mentions alone can’t last forever. The silence from some companies might be frustrating for traders now, but it could be a sign of prudent management. Or, you know, it could mean they’re completely asleep at the wheel. Only time will tell.
