Artificial Intelligence has taken the stock markets by storm as it has been established to rapidly gain prominence in the interactions, functioning and management of companies in a very short period of time, especially when it comes to productivity.
Just 15 years ago this was almost non-existent for companies, as it turns out Their results are noted in the transcript of the corporations’ comments. Reviewed by Morgan Stanley since 2005. But interest began to grow in 2016, it skyrocketed when ChatGPT started to fully realize its potential in 2022 and established itself as one of the relevant issues to be detailed in front of analysts at this time. have taken.
In the 21st century, AI and the efficiency improvements it brings are as much a part of the corporate conversation that this bank analyzes as wage pressures, margins, inventories or inflation. And as Business Commentary develops, this happens across all sectors, from machinery to electronics, media and entertainment to real estate.
Between caution and complete enthusiasm
Some of the conversation suggests some caution needs to be taken, like with Dropbox. “We want to stay disciplined, because I mean, another thing is, even in the field of artificial intelligence, There is a bit of a bubble regarding funding for AI startups.and I don’t think it’s everywhere, but I think you have to be careful.” Others show an intuitive commitment to this tool, as is the case with Microsoft: “More than 230,000 organizations already use the Power Platform. have used artificial intelligence capabilities in 100,000 applications, an increase of more than 80% compared to the previous quarter.”
Equinix discusses its imperative to come from the real estate sector: “At the same time, many clients remain cautious due to macroeconomic uncertainty and are driving optimizations in their IT infrastructure – freeing up resources for AI-related investments. However, they continue to manage within a tight overall budget.”
And just about as the meta describes. “I would say we don’t expect our GenAI products to be a significant revenue driver in 2024, but we certainly expect they will have the potential to contribute significantly over time.”
productivity improvement
“AI has become commonplace for business commentary,” say Morgan Stanley analysts. “It seems we are still in the early stages of the impact on revenues and margins,” he explains, citing the tool as a first measure as a key to increasing efficiency and employee productivity.
In a recent survey of CIOs (company information technology managers), this bank has confirmed that This is the year of investing in AI and generative AI Given the greater impact on managed budgets, productive improvements are also expected among early adopters (software and Internet companies) this year.
The market impact will generally come next year:
“We see AI-driven productivity adding an additional 30 basis points to 2025 net margins for the S&P 500 (13.0% net margin in the base case), although we believe the risks in this regard are tilted to the upside “With an additional impact of 50 basis points,” he explains to Morgan Stanley.
fewer appointments
Economists in this unit agree that the services sector is the sector that will benefit most from continued productivity growth as a driver of AI. Something workers will notice:
“We see the continued shortage in the service sector labor market as an incentive to adopt artificial intelligence and productivity-enhancing technologies.”
It is also no coincidence that in this context and after years of strong job growth coupled with tight employment demand, Companies talk less about hiring and more about layoffs, What is currently known is that there was strong job creation in January, but a large number of companies, from technology to finance and commerce, have announced thousands of layoffs.
Hiring intentions have fallen below the 2015-2020 trend, even though companies have not been able to accommodate all of their job offers and remain at elevated levels.
Besides, Salary cost pressures remain a concern, according to transcripts, Automotive component maker Lear explained to analysts that rising wages are “one of the biggest challenges.” The Texas Roadhouse restaurant chain expects “wage and other labor inflation to range between 4% and 5% in 2024.”
Better demand, lower inflation
Still, the transcripts show companies are cautiously optimistic about demand. While the US economy is defying the expected recession, companies are increasingly calling this year a transition year and are looking for “stabilization” and “green shoots”or signs of recovery.
Deere & Company revealed in its comments that dealers in the US “continue to see good demand for products”, similarly Rockwell Automation reported that they “saw continued double-digit growth in orders in the first quarter and we expect “He is in the other. “In the US we are seeing demand slowly coming back.”Selenes are used by the chemical industry.
And now that we are in the final stages of inflation normalizing to around 2%, which the Federal Reserve wants to see, mentions of upward pressure on prices are decreasing and mentions of deflation are increasing. Low inflation is a reality but small businesses will continue to raise prices. Small businesses are the ones that admit suffering from high interest rates to such an extent that it is their biggest problem.
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