The Effect of AI Development on Stock Prices
DOI:
https://doi.org/10.58445/rars.1738Keywords:
Quantitative Economics, Robotics and Intelligent Machines, Artifical Intelligence, Machine Learning, Stock MarketAbstract
The period from 2019 to 2024 has been marked by tremendous progress in AI. During the late 1990’s and the 2000s, there was a ‘.com’ bubble: excitement about the rise in internet led to the stock prices of US tech companies to rise tremendously. Eventually, this bubble burst, leading to huge losses. 2023 saw a similar rise in the share prices of AI companies. This led to people speculating whether an ‘AI bubble’ is forming, similar to the ‘.com bubble’ of the 2000s.
Therefore, to investigate this phenomenon, the paper will compare stock price movements for companies that develop AI products and those that don't. For this purpose, the stock prices of the top 25 companies from the S&P 500 have been selected based on their index weight, after which the companies were classified as AI companies and non-AI companies. Then, the graphs were drawn using the R programming language to compare the stock prices. From this, it was seen that companies that have been classified as AI saw a boost in their stock prices due to AI-related products, mergers, acquisitions, development of generative AI, and dependence on technology during the COVID-19 pandemic, as compared to the stock prices of non-AI companies.
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