In a Working Paper for the U.S. based National Bureau of Economic Research Nicola Borri, Aleh Tsyvinski and Yukun Liu of the LUISS, Yale and Rochester universities have used Open Router data to study the use of 380 trillion tokens or about 2% of current monthly global usage to see what effect company usage of AI may have on their stock price.
The work is involved so just the main points here:
- The first task was to develop a scoring system to decide who’s an AI intensive firm and who is less so. From that..
- It was found that the stocks of firms with high AI use scores have subsequently better returns.
- It was also noted that firms with “..intensive, frontier-oriented margin of AI consumption—closed-source models, paying and seasoned users, and long prompts” were the winners i.e. the pros.
- The effect couldn’t be isolated in emerging markets, especially China.
- The trend toward agentic AI is clear with a significant number of users chaining tasks together in ever more complex arrangements.
One chart in particular jumped out, token usage. As you’d expect we see steady growth. Look again and you’ll note that’s a log-scale!
On pages 22 and 23 there’s also a list of S+P firms ranked in terms of top AI-involved scorers and bottom scorers that makes for interesting review.
I have some reservations:
First, the time period for study is (necessarily) short, and the dataset limited. Firms with poor AI scores may be working now to change this.
Second, in the early days of ESG adoption studies along the same lines appeared. Rather than showing ESG was a good idea though what were being revealed were well run and inquisitive firms willing to explore new ways of arranging their business and the market paid a premium for that.
Finally, the study concentrates on stock price returns not on long term profitability gains. Often, and for long periods, we observe these don’t go hand in hand.
Caveats aside this is a great piece and the authors are to be commended for the initiative. You can read the paper in full via the following link, AI Premium.
Happy Sunday.