Artificial Intelligence: a vital tool for the Investor Relations in 2023

By Patrick Yau, Managing Director, Strategic Investor Relations , Edison Group

Artificial intelligence (AI) has been making significant impressions in the field of investor relations (IR) in recent years. IR is a critical function of any publicly traded company, responsible for managing communication and relationships with investors and analysts. The increasing complexity and volatility of financial markets, in addition to digital and social media channels, have made it necessary for companies to leverage AI to enhance their IR capabilities. AI is an increasingly important tool for investor relations professionals and can help companies build stronger relationships with their stakeholders through a variety of means.

Automated Insights

One of the primary advantages of AI in IR is the ability to automate the analysis and interpretation of large amounts of data. This includes financial data, news articles, social media posts, and other types of information that can impact a company’s stock price. With AI-powered tools like natural language processing (NLP) and machine learning, companies can quickly identify patterns and trends that might be missed by human analysts. This can provide valuable insights into market sentiment, competitor activity, and other factors that can affect a company’s performance. By leveraging these insights, companies can make more informed decisions and communicate more effectively with their investors.

Real-time Monitoring

AI-powered tools can also help companies monitor and respond to market events in real-time. This is particularly important in today’s fast-paced financial markets, where a single tweet or news article can have an immediate impact on a company’s stock price. With AI-powered tools, companies can quickly identify and analyse relevant data sources to monitor market activity and respond quickly to any issues or opportunities. This can help companies stay ahead of the curve and make better decisions in the face of uncertainty.

Company usage of AI for IR

Many companies in the financial industry are leveraging AI to analyse financial data, monitor market trends, and provide insights to their clients. For example, BlackRock, one of the world’s largest asset managers, uses AI to interpret market data and identify investment opportunities. The company also uses AI to evaluate portfolio data and pass on critical information to its client bank. Additionally, Google uses AI in its IR programmes to examine investor sentiment and share findings with its investor relations team. The company also uses AI to analyse financial data and provide forecasts, allowing for a greater knowledge of the sector. Other companies such as JP Morgan Chase, Nasdaq and S&P Global have also turned to these AI programmes for their investor relations.

The ROI for companies adopting AI into their IR programmes can vary depending on the specific use case and how effectively the technology is implemented. However, studies have shown that companies that leverage AI in their investor relations activities can gain a competitive advantage by identifying investment opportunities faster and making more informed decisions based on data-driven insights.

Improved Investor Targeting

Another key advantage of AI in IR is the ability to identify and target the right investors at the right time. One common feature within AI is NLP. This form of AI is used to analyse the language used in investor communications, such as earnings calls and press releases, to identify the topics that are most important to investors. This information can help companies to tailor their investor relations communications to the interests of their target investors. Sentiment analysis is also commonly used, which can help analyse social media posts, news articles, and other publicly available data to determine the sentiment of potential investors towards a company. This information can help companies to identify potential investors who are positive about the company and are more likely to invest in it.

A Platform that IROs Should Use (in Addition)

IROs could use chatbots or other AI-enabled communications tools to share information with investors, as these technologies can provide a fast and efficient way to answer common questions and provide basic information. However, there is a risk that these types of communications may be perceived as lacking in authenticity or personalisation. If chatbots are used in a way that feels robotic or impersonal, it could potentially harm the company’s relationship with its investors.

To mitigate this risk, IROs could consider using chatbots in conjunction with other communication channels, such as email or phone calls, to provide more personalised support for investors who need it. By taking these steps, IROs can use AI-enabled tools to improve their communications with investors without sacrificing authenticity or personalisation.

Better Risk Management

Finally, AI can also help companies manage risk more effectively. By analysing historical data and identifying patterns, AI-powered tools can help companies identify potential risks and develop strategies to mitigate them. This can help companies avoid costly mistakes and make better decisions in the face of uncertainty. For example, AI can be used to identify potential risks associated with a particular investment strategy, or to monitor news and social media activity for signs of negative sentiment or other potential risks.

AI is becoming increasingly important for investor relations as companies look to enhance their capabilities in the face of changing market dynamics and investor expectations. By leveraging AI-powered tools, companies can automate analysis and interpretation of large amounts of data, personalize investor communications, monitor market activity in real-time, improve investor targeting, and manage risk more effectively. As such, companies that fail to leverage AI in their IR activities risk falling behind their competitors and losing valuable opportunities to engage with their investors.