It’s earnings season again! Beyond the financial figures in the earnings reports, the discussions and Q&A sessions during earnings calls are also a key area of focus, offering valuable insights into a company’s strategy, market outlook, and more. As a result, going beyond key financial metrics, MacroMicro has developed a series of new indicators that convert qualitative data into quantitative insights by tracking the frequency of thematic keywords mentioned in earnings calls of S&P 500 companies, providing a new tool for capturing market trends.
Overview
Recently, we analyzed 15 years of earnings call transcripts of S&P 500 companies, calculating the frequency of keywords associated with various themes. A higher frequency of mentions indicates greater emphasis or interest in that topic by companies. This data can thus be used to identify trending themes and evolving market trends.
In the sections below, we delve into some of the key trends based on the thematic keywords we identified. For example, for the theme of inflation, we calculate the occurrences of words like “inflation,” “CPI,” and “PPI” in earnings calls.
Where to Find the Keyword Indicators:
we’ll be launching a new section called Industry Insights Hub by the end of this year, which will not only feature key industry indicators but also include the exclusive S&P 500 earnings call indicators covered in this article, a great tool for you to quickly grasp crucial industry trends for U.S. equities. Sign up for an annual subscription now to enjoy the best rates!
Key Trend 1: Shifting Industry Hotspots from New Energy to AI
By analyzing the mentions of thematic keywords S&P 500 companies mentioned in their earning calls, we can trace the evolution of market-leading products over time. Trends in keyword mentions also reflect the gradual integration of innovations propelling productivity growth in the current productivity cycle.
1. Consumer Electronics Like Smartphones and Computers Saw Their Heyday in the Early 2010s
The ongoing productivity cycle began with the widespread adoption of smartphones. Following Apple's launch of the iPhone in 2007, the smartphone market experienced rapid growth, with other manufacturers quickly following suit by launching their own smartphone products. Mentions of keywords like “smartphone” in S&P 500 earnings calls began to rise significantly, peaking in the 2010s.
As the smartphone market reached saturation and maturity, the number of mentions also flattened after 2018. The computer market followed a similar trajectory.
2. EV Growth Accelerated from 2015 but Has Leveled Off Recently
Following the boom of smartphones and computers, mentions of “electric vehicles” saw three main upward trends in 2015, 2019, and after the 2020 pandemic. These coincided with significant developments such as China’s subsidy policies for new energy vehicles in 2015, the construction of Tesla’s Shanghai Gigafactory in 2019, and Europe passing the world’s strictest auto emission standards in 2019. Also, after the pandemic, major economies including the U.S., China, and Europe further accelerated their timelines for EV adoption.
However, supply chain bottlenecks have slowed the momentum of the EV sector, with mentions of related keywords in earnings calls flattening over the past three years. This trend also mirrored the price movements of EV-related ETFs, which experienced sharp declines starting in 2022 and have not yet seen a significant rebound.
3. Renewable Traction Surged Early in Biden’s Term but Has Since Declined Sharply
Mentions of keywords related to renewable energy, climate change, and ESG topics followed a similar pattern, spiking starting from 2020, which coincided with the start of Biden's presidency. However, discussions of these topics during earnings calls declined sharply after 2021, mainly due to rising raw material costs and higher financing costs starting from 2022, which began to put a strain on the cost structures of renewable energy companies. Related ETFs also experienced substantial losses. The iShares Global Clean Energy ETF (ICLN), for instance, is still trading more than 50% below its 2021 peak.
4. AI Interest Soared Following Launch of ChatGPT
Mirroring soaring interest in artificial intelligence (AI) over the past two years, AI-related discussions in earnings calls, as evidenced by mentions of related keywords, have also seen explosive growth, with little signs of slowing so far. As the chart below shows, the average number of mentions of AI-related keywords has increased from 2 to 7 times per earnings call since the advent of ChatGPT, making AI the new driving force extending the current productivity cycle.
This development has also led to growing market attention in recent years on the practical applications of AI. A cross-sector comparison shows notable differences in keyword frequency across industries, with tech and communications, as the industries most directly involved in AI development, leading the pack with an average of over 18 mentions of related keywords per earnings call. In contrast, sectors like consumer staples, energy, raw materials, utilities, and healthcare have seen far less keyword mentions, many of which are defensive sectors that are less cyclical. The sectoral disparity suggests AI adoption is not yet widespread across all industries.
Key Trend 2: Companies No Longer Fretting Over Inflation, Meanwhile No Uptick in Layoffs
In addition to industry trends, earnings calls also provide insights into how companies are responding to broader macroeconomic shifts. With economic conditions shifting once again and recession risks rising, below is a quick observation of the current corporate sentiment toward layoffs, recession, inflation, and the upcoming U.S. elections.
1. Few Companies Considering Downsizing, Recession Mentions Remain Low
Mentions of keywords related to layoffs in earnings calls were higher during periods like 2008-2009, 2020, and 2022. Corresponding to the global financial crisis, the COVID-19 pandemic, and the aggressive interest rate hikes beginning in 2022, these periods also saw a parallel surge in mentions of keywords related to recessions. In contrast, currently layoff and recession mentions both remain at low levels. While recession risks have increased, the data suggests we are still some distance away from an actual downturn.
2. Corporate Concerns over Inflation Have Eased, Cost Worries are Fading Too
Historical data shows that mentions of inflation in earnings calls closely track the Consumer Price Index (CPI). Discussions of inflation hit their highest point when the CPI peaked in 2022. Since then, related keyword mentions have gradually declined and are now back to long-term average levels, indicating inflation is no longer a major concern for U.S. companies.
Analysis on occurrences of thematic keywords in corporate earnings calls reflects evolving drivers of the current productivity cycle, from consumer electronics, to electric vehicles, renewable energy, and now the ongoing AI boom. With interest in AI still going strong, the subsequent infrastructure build-out in areas like servers still holds significant potential.
On the macroeconomic side, mentions of keywords related to layoffs and recessions remain subdued, while inflation-related discussions continue to decline. This suggests that rising unemployment is not driven by corporate layoffs, and a recession is still some distance away.
Author: MacroMicro (AL)
Editor: MacroMicro (Owen, Emilia Wei)
It’s earnings season again! Beyond the financial figures in the earnings reports, the discussions and Q&A sessions during earnings calls are also a key area of focus, offering valuable insights into a company’s strategy, market outlook, and more. As a result, going beyond key financial metrics, MacroMicro has developed a series of new indicators that convert qualitative data into quantitative insights by tracking the frequency of thematic keywords mentioned in earnings calls of S&P 500 companies, providing a new tool for capturing market trends.
Overview
Recently, we analyzed 15 years of earnings call transcripts of S&P 500 companies, calculating the frequency of keywords associated with various themes. A higher frequency of mentions indicates greater emphasis or interest in that topic by companies. This data can thus be used to identify trending themes and evolving market trends.
In the sections below, we delve into some of the key trends based on the thematic keywords we identified. For example, for the theme of inflation, we calculate the occurrences of words like “inflation,” “CPI,” and “PPI” in earnings calls.
Where to Find the Keyword Indicators:
we’ll be launching a new section called Industry Insights Hub by the end of this year, which will not only feature key industry indicators but also include the exclusive S&P 500 earnings call indicators covered in this article, a great tool for you to quickly grasp crucial industry trends for U.S. equities. Sign up for an annual subscription now to enjoy the best rates!
Key Trend 1: Shifting Industry Hotspots from New Energy to AI
By analyzing the mentions of thematic keywords S&P 500 companies mentioned in their earning calls, we can trace the evolution of market-leading products over time. Trends in keyword mentions also reflect the gradual integration of innovations propelling productivity growth in the current productivity cycle.
1. Consumer Electronics Like Smartphones and Computers Saw Their Heyday in the Early 2010s
The ongoing productivity cycle began with the widespread adoption of smartphones. Following Apple's launch of the iPhone in 2007, the smartphone market experienced rapid growth, with other manufacturers quickly following suit by launching their own smartphone products. Mentions of keywords like “smartphone” in S&P 500 earnings calls began to rise significantly, peaking in the 2010s.
As the smartphone market reached saturation and maturity, the number of mentions also flattened after 2018. The computer market followed a similar trajectory.
2. EV Growth Accelerated from 2015 but Has Leveled Off Recently
Following the boom of smartphones and computers, mentions of “electric vehicles” saw three main upward trends in 2015, 2019, and after the 2020 pandemic. These coincided with significant developments such as China’s subsidy policies for new energy vehicles in 2015, the construction of Tesla’s Shanghai Gigafactory in 2019, and Europe passing the world’s strictest auto emission standards in 2019. Also, after the pandemic, major economies including the U.S., China, and Europe further accelerated their timelines for EV adoption.
However, supply chain bottlenecks have slowed the momentum of the EV sector, with mentions of related keywords in earnings calls flattening over the past three years. This trend also mirrored the price movements of EV-related ETFs, which experienced sharp declines starting in 2022 and have not yet seen a significant rebound.
3. Renewable Traction Surged Early in Biden’s Term but Has Since Declined Sharply
Mentions of keywords related to renewable energy, climate change, and ESG topics followed a similar pattern, spiking starting from 2020, which coincided with the start of Biden's presidency. However, discussions of these topics during earnings calls declined sharply after 2021, mainly due to rising raw material costs and higher financing costs starting from 2022, which began to put a strain on the cost structures of renewable energy companies. Related ETFs also experienced substantial losses. The iShares Global Clean Energy ETF (ICLN), for instance, is still trading more than 50% below its 2021 peak.
4. AI Interest Soared Following Launch of ChatGPT
Mirroring soaring interest in artificial intelligence (AI) over the past two years, AI-related discussions in earnings calls, as evidenced by mentions of related keywords, have also seen explosive growth, with little signs of slowing so far. As the chart below shows, the average number of mentions of AI-related keywords has increased from 2 to 7 times per earnings call since the advent of ChatGPT, making AI the new driving force extending the current productivity cycle.
This development has also led to growing market attention in recent years on the practical applications of AI. A cross-sector comparison shows notable differences in keyword frequency across industries, with tech and communications, as the industries most directly involved in AI development, leading the pack with an average of over 18 mentions of related keywords per earnings call. In contrast, sectors like consumer staples, energy, raw materials, utilities, and healthcare have seen far less keyword mentions, many of which are defensive sectors that are less cyclical. The sectoral disparity suggests AI adoption is not yet widespread across all industries.
Key Trend 2: Companies No Longer Fretting Over Inflation, Meanwhile No Uptick in Layoffs
In addition to industry trends, earnings calls also provide insights into how companies are responding to broader macroeconomic shifts. With economic conditions shifting once again and recession risks rising, below is a quick observation of the current corporate sentiment toward layoffs, recession, inflation, and the upcoming U.S. elections.
1. Few Companies Considering Downsizing, Recession Mentions Remain Low
Mentions of keywords related to layoffs in earnings calls were higher during periods like 2008-2009, 2020, and 2022. Corresponding to the global financial crisis, the COVID-19 pandemic, and the aggressive interest rate hikes beginning in 2022, these periods also saw a parallel surge in mentions of keywords related to recessions. In contrast, currently layoff and recession mentions both remain at low levels. While recession risks have increased, the data suggests we are still some distance away from an actual downturn.
2. Corporate Concerns over Inflation Have Eased, Cost Worries are Fading Too
Historical data shows that mentions of inflation in earnings calls closely track the Consumer Price Index (CPI). Discussions of inflation hit their highest point when the CPI peaked in 2022. Since then, related keyword mentions have gradually declined and are now back to long-term average levels, indicating inflation is no longer a major concern for U.S. companies.
Analysis on occurrences of thematic keywords in corporate earnings calls reflects evolving drivers of the current productivity cycle, from consumer electronics, to electric vehicles, renewable energy, and now the ongoing AI boom. With interest in AI still going strong, the subsequent infrastructure build-out in areas like servers still holds significant potential.
On the macroeconomic side, mentions of keywords related to layoffs and recessions remain subdued, while inflation-related discussions continue to decline. This suggests that rising unemployment is not driven by corporate layoffs, and a recession is still some distance away.
Author: MacroMicro (AL)
Editor: MacroMicro (Owen, Emilia Wei)
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