AI is not just a capex story

Capex spending has dominated the AI narrative recently (META and GOOG took big hits, after raising the capex spend for the rest of the year), and people are worried that the spending might not result in a return on investment. As a person who runs an independent research service, AI has helped me do a lot more with far less, and I was curious to what extent this was being noted in companies most recent earnings calls. 107 companies directly linked AI to improved margins, and it's across the spectrum, not just confined to tech. A few names that stood out: |Symbol|Sector|Return since Earnings Call (as of August 7th)|Transcript Quote| |:-|:-|:-|:-| |NOW|Tech|\+30.8%|"We expect subscription gross margin of 81%, reflecting more customers utilizing our hyperscaler partnerships as well as accelerating AI adoption."| |MED|Consumer|\+29.6%|"The Catalyst program is designed to drive additional cost savings through facility rationalization, AI-related efficiencies, and other means, all while being certain we do not negatively impact our ability to grow"| |HURN|Industrials|\+25.3%|"We're confident that our collective strategic, financial, operational and digital offerings, all enabled by AI will continue to yield positive revenue growth and margin expansion as evidenced by our continued strong backlog and pipeline"| |SSNC|Tech|\+18.3%|"We're deploying AI across our products and operations, and it is one of the drivers of the growth and margin expansion you see in these results"| |ABNB|Consumer|\+17.4%|"The customer service cost per booking is down about 16% year-over-year, in large part due to the AI agent. Second, what we're seeing is that we don't need to grow our head count at levels that we did in the past because we're getting so much more output and speed from our existing workforce, which obviously, also creates efficiencies over time"| I find NOW particularly interesting, given the fears around SaaSapocalypse. Personally, I find that hypothesis to be far-fetched, given that NOW has access to the same AI tools that everyone else has, plus deep domain expertise and existing-relationships. All else equal, NOW has a clear advantage over new entrants. And given the recent earnings calls, AI can help improve, not hurt, margins for software companies. Not saying this is a universal phenomenon, but do think this gets lost in the discussion around AI spending and bubble-talk.