Happy Friday, investors. Sometimes what you say is just as important as what you do.

That’s turned out to be the case in markets over the last year.

There’s one specific word — you can probably guess which — that’s made a world of difference in stock performance.

ChatGPT debuted three years ago and AI has become a dominant force in financial markets. 

The fast-developing technology is so top of mind for corporate America that a record 306 S&P 500 companies mentioned “AI” on their earnings call in the latest quarter, according to FactSet. 

That’s six times the amount compared to the quarter before ChatGPT launched in November 2022.

The quiet corollary to draw from that surge, though, is that nearly 40% of companies still are not talking about AI to their shareholders.

To be sure, public companies must focus only on material information during earnings calls.

Failing to mention AI, then, may be a consequence of the technology not yet playing a substantial enough role in the business yet.

“AI may be important over the long run, and yet it may not rise to the level where it affects near term fundamentals,” said DataTrek Research co-founders Nick Colas and Jessica Rabe.

In their view, the data suggest that for a large portion of the index, AI remains an abstract long-run consideration rather than something that drives revenue or strategy in the present.

Notably, 95% of companies in the technology and communications sectors mentioned “AI” on their earnings calls, while more than 64% did across the financials, real estate and industrials sectors. 

Meanwhile, roughly half the companies in the materials, consumer discretionary, energy, healthcare, consumer staples and utilities sectors mentioned “AI.”

As it turns out, just talking about AI has been a leading indicator for stock returns over the last year, according to data from FactSet illustrated in the chart below.

“This is the ‘AI trade’ writ large,” said Colas and Rabe.

“Companies that can find a legitimate reason to discuss AI with investors tend to have better performing stocks than those where the technology is not immediately material.”

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📈Broadcom smashes earnings expectations. It issued a strong forecast for the months ahead driven by AI sales. Still, the stock fell more than 4.5% on the news. (CNBC)

🐭Disney is putting $1 billion into OpenAI. The deal makes the company the first major content licensing partner on Sora, OpenAI’s video platform. Now, AI-generated videos will be able to draw from Disney, Marvel, and Pixar characters. (Axios)

📦 Costco stock dipped despite topping earnings expectations. Sales rose 8.2% and digital sales soared 20% in the quarter versus a year ago. Meanwhile, traffic to its website rose 24% year-on-year. (CNBC)

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I sat down with Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, to discuss the record year for ETFs, the rise of crypto and leverage on Wall Street, and the debate around passive investing risks.

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🗓December 12, 1914: The New York Stock Exchange reopened after being closed since late July for the outbreak of World War I, marking the end of one of the largest trading halts in history.

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

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