Abstract

The rapid advancement of artificial intelligence (AI) has led firms to integrate AI technologies into their strategic agendas, given AI’s transformative potential to boost productivity and reshape competition. Firms increasingly make public announcements about their AI initiatives to inform investors and stakeholders. Yet, how the stock market interprets and reacts to these announcements remains unclear, particularly amid uncertainty regarding AI’s implementation and outcomes. Unlike earlier IT that primarily improved operational efficiency, AI can augment or replace complex cognitive and decision-making tasks and enable adaptive, self-learning systems. These attributes raise AI’s strategic importance, meaning investor reactions may reflect a mix of innovation enthusiasm and concerns about risk, feasibility, and execution capability. Accordingly, this study examines how investors evaluate AI-related announcements by analyzing stock market reactions around these events. It seeks to determine whether such announcements signal firm-specific strategic value or suggest broader industry disruption, potentially affecting perceptions of both the announcing firm and its competitors. This study compares stock price movements before and after the announcements. Preliminary results indicate that the market does not respond uniformly to AI announcements. Instead, investor responses appear context-dependent, influenced by factors such as timing and competitive landscape. This research contributes to the digital innovation literature by positioning AI as a transformative force with the potential to disrupt industry norms. For practitioners, the findings underscore the importance of strategic communication and execution when launching AI initiatives.

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