What CEOs talked about in Q2/2023

IoT Analytics has conducted an extensive keyword analysis based on a comprehensive dataset of approximately 75,000 earnings calls from leading US-listed firms. The findings from the second quarter of 2023 reveal crucial discussions led by CEOs, focusing on three pivotal themes: Generative AI applications, bank challenges, and economic uncertainty. These influential topics have captivated boardrooms worldwide, ultimately shaping the future investment priorities for companies across various industries. KEY QUOTES : Philipp Wegner, Principal Analyst at IoT Analytics, comments: “CEOs are now discussing how their companies can use generative AI applications. The discussion shifted to actual deployment of Large Language Models.” KEY INSIGHTS : According to the latest “What CEOs talked about” report, three themes noticeably gained traction in earnings calls in Q2/2023: 1. AI & Generative AI, 2. Bank troubles, and 3. Reshoring. Discussions around economic uncertainty, sustainability, and supply chain disruptions lost traction. The big picture In Q2 2023, economic uncertainty remained the most discussed theme in boardrooms globally. There was a notable decline in the number of CEOs discussing inflation, with only 50% mentioning the keyword (a 21% decrease from the previous quarter). Similarly, other related topics also experienced a decrease in prominence, with interest rates being discussed by only 33% (-13%) of CEOs and the term “recession” being mentioned in just 18% (-15%) of all earnings calls in Q2/2023. Despite these slight variations in the focus on economic topics among CEOs, it is important to note that overall, economic uncertainty remains a prevailing concern in boardrooms. Key CEO quote on the macro environment: “We expect macro headwinds will continue with the potential for a recessionary environment across both the U.S. and Europe.” – Ian Broaden – Executive Vice President and Chief Financial Officer, McDonald’s, May 2, 2023 Key upcoming themes (Generative) AI Generative AI discussions, specifically around use cases and applications, continue to increase. The mention of Generative AI experienced a significant increase of +129% in the last quarter, with 6% of discussions specifically referencing it. Additionally, the broader topic of AI was discussed in 21% of earnings calls (+21%), while the more technical term, “large language model” (LLM), saw a 229% increase in mentions, and was present in 1% of all earnings calls. Banks CEOs discussed banks more frequently in Q2 2023 (+36%). Following the banking turmoil involving several institutions including Silicon Valley Bank (SVB) and Credit Suisse in Q1 2023 companies discussed about a potential fallout as well as stricter lending regulations from some (regional) banks. Key CEO quote on banks: “We have seen a number of banks pulling back from auto lending, which is kind of a hallmark of banks through difficult markets, and that’s created a bit of a pricing opportunity for us, as well as improvement in share – financing share for us.” – Marion Harris – CEO, Ford Motor Company Credit Company, 02 May 2023 Reshoring Discussions around reshoring increased by +30% in Q2 2023. 1.3% of all companies and 5% of industrial companies talked about the topic. Given the ongoing tensions between China and the USA, many US-based companies appear to prioritize enhancing the resilience of their supply chains, and some have concluded that bringing production closer to home is the solution. Key CEO quote on reshoring: “Reshoring continues to be a prevalent topic among our customers, and we expect near and longer-term benefits from this trend.” – Frank Dellaquila – CFO, Emerson Electric Co., 03 May 2023 Declining themes Sustainability and climate change Despite record temperatures around the world (e.g., temperatures in the North Atlantic Ocean increased to records highs), discussions on climate (-16%), emissions (-25%) and sustainability (-17%) experienced a decline in Q2/2023. Supply chain disruptions With supply chains slowly improving and supply shortages easing, discussions regarding supply chains in general (-19%), and supply chain disruptions (-54%) in particular, decreased strongly in Q2/2023. Deep dives on select themes #1 (Generative) AI The release of ChatGPT by OpenAI in November 2022 ignited an unprecedented discussion about the use cases of generative AI in boardrooms. Generative AI was mentioned by 6% of all CEOs in Q2/2023 – a remarkable increase of +129%, compared to the previous quarter. Discussions have transitioned from specifically discussing the tool ChatGPT itself (mentioned by 3.7% in Q2, an increase of 28%) to actual enterprise-wide applications of generative AI. Moreover, an increasing number of CEOs also delved into technical details: The keyword LLM (large language models, the foundation for ChatGPT) was discussed by 1%, representing a substantial increase of +229% compared to the last quarter. […]

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