Stock Market

FactSet Vice President and Senior Earnings Analyst John Butters’ Earnings Insights weekly research report covers, amongst other things, the number of times S&P 500 companies mention the words “artificial intelligence” and “AI” during their quarterly earnings calls. 

In Q4 2023, the conference calls carried out between Dec. 15, 2023, and March 14, 2024, FactSet found that 179 S&P 500 companies cited these words during their fourth-quarter conference call. That’s more than double the five and 10-year averages of 73 and 45, respectively. 

Butters said it was the second-highest number of S&P 500 companies cited in a quarter since 2014. The highest? Approximately 181 in Q2 2023. 

Of the 179 companies, the average mentions of AI was 13, the median was five, and nine S&P 500 companies mentioned the term more than 50 times.

While Butters doesn’t discuss the CEOs who mentioned artificial intelligence, he lists the top companies that mentioned AI in the fourth quarter. From that, it’s easy to search for conference calls to confirm.

Here are the three best stocks to buy from the nine. 

Nvidia (NVDA)

Source: Ascannio / Shutterstock.com

Nvidia (NASDAQ:NVDA) mentioned AI 114 times in its Q4 conference call. Given that the chip company has become the artificial intelligence champion in tech, it makes total sense.

Although CEO Jensen Huang didn’t speak in the prepared remarks section of its call in February, CFO Colette Kress laid out the quarter for analysts and answered questions in the Q&A afterward. 

For example, Huang said this about generative AI:

“Generative AI, I’m sure we’re going to talk plenty — plenty about it during the call. But remember, generative AI is a new application. It is enabling a new way of doing software, new types of software are being created. It is a new way of computing. You can’t do generative AI on traditional general-purpose computing. You have to accelerate it,” Huang said while answering a question from Goldman Sachs analyst Toshiya Hari. 

The CFO first mentioned artificial intelligence while discussing Nvidia’s data center revenue in the fourth quarter, which was off-the-charts good. It was up 27% over Q3 2024 to a record $18.4 billion and 409% higher than a year earlier. 

Kress said the H200 GPU (graphics processing unit) would start shipping in Q2 2025. This GPU has double the inference performance, which means it can better achieve the result an AI model aims to accomplish. 

It’s safe to say Nvidia knows a thing or two about artificial intelligence.

Salesforce (CRM)

Source: Tada Images / Shutterstock.com

I can’t remember the last time I wrote about Salesforce (NYSE:CRM). However, AI appeared 93 times in its latest earnings call. It is trying to reinvent itself as an artificial intelligence leader with its Einstein Copilot, its generative AI assistant for its CRM (customer relationship management) applications. 

“Unlike other AI assistants or copilots that lack adequate company data to generate useful responses, Einstein Copilot enables Salesforce customers to generate responses using their own private and trusted data, while maintaining strict data governance and without requiring expensive AI model training,” the company’s Feb. 27 news release launching the generative AI assistant.

CEO and co-founder Marc Benioff said that Einstein AI completed more than 1 trillion transactions in the week of March 18-24. 

Up nearly 60% over the past year, Salesforce is on a roll.

Although FactSet says Salesforce mentioned artificial intelligence 93 times in its Q4 2023 conference call, Benioff doesn’t mention it until 18 paragraphs into his prepared remarks

During the conference call, the company spent a lot of time talking about its data cloud, with Benioff saying, “The AI-based data cloud is doing this incredible heavy lifting. So it’s going to be an amazing organic driver for us.”

I’m not entirely sold on Salesforce’s adoption of artificial intelligence and how that helps its customers. I must learn more before making a definitive opinion. 

Microsoft (MSFT)

Source: The Art of Pics / Shutterstock.com

Since making its significant investment in ChatGPT, Microsoft (NASDAQ:MSFT) has been all about artificial intelligence. FactSet’s numbers suggest Microsoft mentioned AI 72 times on its Q2 2024 earnings call at the end of January. 

Unlike Benioff, Microsoft CEO Satya Nadella mentions AI in the second sentence of his prepared remarks and three times within the first paragraph, which included the words, “Thank you, Brett,” to Microsoft’s Brett Iversen, General Manager of Investor Relations.

“We move from talking about AI to applying AI at scale. By infusing AI across every layer of our tech stack, we are winning new customers and helping drive new benefits and productivity gains,” Nadella stated.

The company’s second quarter saw Azure AI reach 53,000 customers. Nadella noted that Azure OpenAI was used by more than half the Fortune 50, including Coca-Cola (NYSE:KO). The money companies are spending on Azure is mind-blowing.

Microsoft Cloud revenue in the second quarter was $33.7 billion, 22% higher than Q2 2023, excluding currency. The segment’s gross margin was 72%, flat year-over-year. 

In the Q4 2023 conference call last July, Nadella said Azure accounted for over 50% of Microsoft Cloud’s $110 billion annual revenue. Through the first two quarters of 2024, it has become an even more significant contributor to the segment’s revenue. 

Like Nvidia, Microsoft sounds like it’s a leader in artificial intelligence. Salesforce, not so much.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

Articles You May Like

Now That the IPO Dust Has Settled, Is It the Right Time to Buy Reddit Stock?
3 Stocks Ready to Ride Apple’s AI Coattails Higher
Tax Refund Windfall: The Top 3 Discount Store Stocks to Buy Now
3 Stocks to Buy Low Today With High Hopes for Tomorrow
7 Stocks the Hedge Fund Gurus Are Piling Into: April 2024