The Value of AI to the Broader Market: Higher Efficiency?

Investor interest in artificial intelligence (AI) was a key driver of the technology industry–led equity market gains during 2023 and much of 2024. Market interest so far has primarily focused on AI-related products, both hardware (such as chips) and generative AI chatbots. However, the ultimate economic and financial value of AI may lie in corporate adoption of AI technologies that results in increased firm efficiency through process improvement and resulting productivity gains. An analogy may be drawn to the Internet revolution of the 1990s that started with the Internet as a product, with long-lasting benefits from productivity gains as the Internet became embedded into corporate processes and all aspects of life. This article gives a preliminary analysis of AI adoption and its associated process efficiency. Our results suggest that the stock-level correlation between AI adoption and process efficiency has become strong quite recently and that the relationship is positive at the industry level and within some industries.