Artificial intelligence investment announcements and stock prices

What are the effects of artificial intelligence (AI) investment announcements on stock prices? We use the event study methodology to provide an answer to this question and improve understanding of the impact of AI investment announcements on firm value. Adopting an innovative approach based on categorizing AI investment announcements by innovation drivers and stakeholders involved, we examine the financial impact of AI investment decisions. We document positive abnormal returns associated with economic drivers and internal stakeholders, insignificant abnormal returns associated with technology drivers and internal and external stakeholders, and both positive and negative abnormal returns associated with social drivers and external stakeholders. We further discuss the implications of AI investment announcements at the overall firm risk level, arguing that AI investments not only impact expectations about firms’ future performance but also their risk profiles.