AI hype is gripping corporate America

On Wednesday, chip company Nvidia reported better-than-expected earnings thanks to the boom in AI, sending its shares shooting up.

At the same time, there are signs the boom is actually slowing, with the number of people using “generative” AI tools like ChatGPT actually beginning to fall in recent months, and venture capitalists beginning to warn entrepreneurs that the path to building a profitable AI start-up is complicated and expensive.

Still, that’s not stopping America’s corporate executives from obsessing over the tech. Ulta Beauty in its annual report said it used AI in part to power its “virtual try-on and skin analysis tools.” Fidelity cited the technology as part of its tool kit to detect fraud. Alaska Air used it to “enable more fuel-efficient flight paths.” Medical company Hologic’s AI algorithm helps medical practicians identify precancerous lesions and cervical cancer cells in women. Yum China Holdings, which owns KFC and Pizza Hut, plans to use AI to better connect online orders to brick and mortar stores.

The technology has become what AI pioneer Marvin Minsky referred to as a “suitcase term, ” said Joseph Fuller, a Harvard Business School professor. “You kind of jam anything in there you wanted, you know, and carry it around and say ‘Oh, this is my AI.’”

Companies are even adding AI to their name. In 2019 C3 IoT — shorthand for the buzzword of yesteryear, the internet of things — rebranded to C3 AI. According to the company, the name change was to better meet market perceptions and came with a suite of new products.

Roughly one in seven public companies talked up AI in their most recent annual filings, following a boom in generative AI, which create text or images based on prompts, pushed it into the mainstream. This year, the stock market has rallied, largely driven by companies that are at the center of the AI revolution like Microsoft and Nvidia.

It’s become such a buzzword that some companies were “starting to rebrand things they were already doing as artificial intelligence,” said Mark Riedl, a professor who focuses on artificial intelligence at Georgia Tech. Nearly anything involving data could be considered AI. “And you might just get a little bit of extra pop for whatever you’re trying to achieve.”

AI technology goes well beyond the generative tools like ChatGPT or the Dall-E image generator. The term can describe a wide range of technology, including using data to spot patterns and make predictions. This is the type of AI most widely used by companies today, said Fuller.

The latest technology breakthroughs are so recent that CEOs “will be learning about it too, but they’ll want to reassure institutional retail investors that they’re not asleep at the switch.”

It’s not all upside. Advances in AI are reported as an intellectual property risk in Williams-Sonoma’s annual report. Shoe Carnival states a risk in being “unable to quickly adapt to rapid change” brought on by AI and other technologies. Many more companies, such as Adobe and Zoom, note that regulation of AI could disrupt their business model.

While business services and manufacturing, which both include technology companies, make up the bulk of companies touting AI to investors, in recent years more financial firms — and especially blank check companies — have joined the ranks.

Blank check companies, also known as special purpose acquisition companies (SPACs), raise money from investors to merge with and take private companies public. They previously latched on to financial crazes in cannabis, crypto and electric vehicles (EV).

Some deals went spectacularly bust. Several EV companies that went public with SPACs, such Lordstown and Nikola, now trade 90 percent below their peak. Most have share prices less than half of their peak, according to The Post analysis of EV and EV-related companies that went public with SPACs in 2020 and 2021, identified by consulting firm Frost and Sullivan.

“Most SPACs are just everyday, ordinary companies,” said Stanford law professor Michael Klausner. “But they’re disproportionately … fad-like companies.”

It may be too soon to tell, however, how much of the AI hype is just that.

“There’s a lot of exuberance, a lot of excitement with regard to the role AI will play in the economy going forward,” said StoneX chief market strategist Kathryn Rooney Vera. “Everybody wants to be in the space or they talk about being in the space.”

Gerrit De Vynck contributed to this report.

The Post analyzed references to “artificial intelligence” in 10-K forms filed to the Securities and Exchange Commission (SEC) using the agency’s Edgar search tool and index files. Standard Industrial Classifications (SIC) were used to identify company types. Data is from June to June of each year and companies outside the U.S. were excluded.