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The rise of AI as a threat to the S&P 500 [pdf]

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Re: The rise of AI as a threat to the S&P 500 [pdf]

#41

Post by dmurray »

steveklabnik wrote: post #18
yellow_lead wrote: post #13

Adding something to the "Risks" section of your company's financial report reads more like CYA ("Cover Your Ass") than "We're afraid of AI!" behavior.

Yes, the risks part of a 10-K is usually pretty comprehensive, and includes all kinds of things that may or may not be an issue: that's why they're risks, and not problems or showstoppers or something. Many of the 10-Ks I've read enumerate tons of things that have a very low chance of happening. I'd be curious about the position of these segments in the 10-Ks, like, if they're suddenly all at the top, that's much mor…

I'm not sure the position is significant.

It's free to put any bad thing in the risks section of your 10-K; investors aren't going to shun your company over it. If you fail to put the risk in, the bad thing happens, and your company loses value, on the other hand, you may get sued for securities fraud - and courts have been oddly receptive to these suits.

It's like any other clause that gets added to any other mostly-boilerplate legal document over time: one firm adds it, pretty soon everyone copies their work and it's a standard term. It's viral. How fast this spreads among company filings is a matter of epidemiology, not something that actually tells you the companies' outlook.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#42

Post by quickthrowman »

simonw wrote: post #12

They used LLMs to look at the risk disclosures in recent 10-K filings, and found that 3/4 of S&P 500 companies mentioned additional AI risks compared tot heir own previous 10-K - AI-driven cyber attacks, deepfakes, energy demands, regulation (AI EU act) etc.

It’s free to list AI as a risk in a 10K filing to the SEC.

It’s a lot more expensive to pay out a securities fraud settlement if you don’t list it and then suffer a loss that can be pinned on ‘AI’.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#43

Post by steveklabnik »

dmurray wrote: post #41
steveklabnik wrote: post #18

Earlier quoted context omitted.

Yes, the risks part of a 10-K is usually pretty comprehensive, and includes all kinds of things that may or may not be an issue: that's why they're risks, and not problems or showstoppers or something. Many of the 10-Ks I've read enumerate tons of things that have a very low chance of happening. I'd be curious about the position of these segments in the 10-Ks, like, if they're suddenly all at the top, that's much mor…

I'm not sure the position is significant. It's free to put any bad thing in the risks section of your 10-K; investors aren't going to shun your company over it. If you fail to put the risk in, the bad thing happens, and your company loses value, on the other hand, you may get sued for securities fraud - and courts have been oddly receptive to these suits. It's like any other clause that gets added to any other mostly…

I'm not sure it is either, I don't read enough 10-Ks to make a strong claim here, it's just always felt like the ones I've read have been vaguely ordered by importance, and I wonder if that's actually true or not.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#44

Post by tsunamifury »

omneity wrote: post #38
arcticfox wrote: post #21

Earlier quoted context omitted.

I mean, this was absolutely a risk to them. They could have easily lost during the transition.

They did and then spent $5B purchasing Instagram and Whatsapp to recover.

19 billion buying WhatsApp.

Instagram was moments before ipo.

Also the FB html5 play at the time was a decent bridge to the app play which did of course explode growth.

So let’s be fair they didn’t fail but they acquired to grow even more.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#45

Post by HWR_14 »

omneity wrote: post #38
arcticfox wrote: post #21

Earlier quoted context omitted.

I mean, this was absolutely a risk to them. They could have easily lost during the transition.

They did and then spent $5B purchasing Instagram and Whatsapp to recover.

I thought they spent $17B on Whatsapp.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#47

Post by amelius »

k-i-r-t-h-i wrote: post #46
amelius wrote: post #24

If AI can trade stocks and derivatives better than any humans, maybe we'll see wealth accumulation in a few large AI firms. And the stock market becomes effectively useless to the rest of us.

trading =/= investing

investing == long term trading

Re: The rise of AI as a threat to the S&P 500 [pdf]

#48

Post by antonvs »

antisthenes wrote: post #19
mansoor_ wrote: post #10

If the contents of the PDF were any more vague, it could be replaced by whitespace.

It's already about 80% whitespace. I think it doesn't even pass the bar of an undergraduate research paper.

It's from a "totally independent, not-for-profit" research/consultancy/think tank which is "funded predominantly on a project to project basis". So this is a work product, implying all the constraints that go with that.

Re: The rise of AI as a threat to the S&P 500 [pdf]

#49

Post by blharr »

Permit wrote: post #8
seydor wrote: post #2

I would like to make a correction. "1 in X companies" should be replaced with "1 in X marketing departments". The fact that the companies talk about AI does not mean they will do anything about it. It's trendy

From the linked PDF: > This report uses a range of cutting-edge LLM-assisted data techniques to extract key risk information from S&P 500 company filings. Following the recent boom in generative AI, we examine reported risks from these leading firms related to artificial intelligence. We clarify the extent to which firms are reporting new AI related risks, what kind of risks are being reported and what these indicate…

Company filings are basically marketing for the shareholders.

They want to mention AI to boost interest and such, and they end up mentioning AI risks to hedge/cover their backs

Re: The rise of AI as a threat to the S&P 500 [pdf]

#50

Post by kjkjadksj »

amelius wrote: post #24

If AI can trade stocks and derivatives better than any humans, maybe we'll see wealth accumulation in a few large AI firms. And the stock market becomes effectively useless to the rest of us.

They already use models for trading better than any human and have probably done so since the 1950s. And what do you know, wealth accumulation has been significant over the last 70 years.
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