AI risk dominates calls as investors dump stocks

In what’s turning out to be a great quarter for corporate earnings growth, company executives and investors alike are focused on something else entirely: the threat from artificial intelligence (AI).

- MICHAEL MSIKA & NICK HEUBECK

Mentions of AI Disruption on management calls almost doubled compared to the previous quarter, a Bloomberg News analysis of transcripts shows. While the technology hasn’t yet noticeably reduced earnings estimates, investors aren't waiting around and instead are selling any company perceived to be at risk.

Last week, commercial real estate company CBRE Group published better-than-expected earnings. In a call with analysts following the results, its chief executive officer said it’s possible AI will reduce demand for office space in the long term. The comments sparked a 20 per cent selloff in the stock over two days.

“As usual, markets shoot first and ask questions later,” said Roberto Scholtes, head of strategy at Singular Bank. “Investors have decided to place the burden of proof on companies that will continue to be hammered until they conclusively prove that they will be among the winners, so there is no rush to jump into these troubled waters.”