The AI investability gap that needs solving

Investors are taking note

Companies should fast-track the adoption of AI as investors are becoming increasingly vocal on the topic. Many leading institutional investors now look at and include AI measures on their scorecards when making investment decisions. Investors are looking for companies that use AI as more than an employee productivity booster, but rather as a tool to improve efficiencies, lower risk and improve the customer experience. They are looking for companies that use AI to drive value creation. For example, IBM has invested in AI and automation and now include it in their enterprise offer. They now add value for customers and help them achieve significant cost savings thanks to AI.

The evidence is already here. Since the start of 2024, the share price of companies that have adopted AI in a meaningful way has outperformed the S&P 500 index by around 10%. Whilst companies that have been disrupted by AI are trading around 20% below the same S&P 500 index. A clear sign that investors are preferring companies that leverage AI and put it at the heart of their future plans.

“Companies that have adopted AI in a meaningful way have outperformed the S&P 500 index by around 10%”.

Not all companies can keep up

Knowing that AI could boost performance, improve efficiencies and create resilience, why are some companies failing to harness AI? Many leadership teams are uneasy about adopting AI too quickly. AI is evolving faster than most can keep up with; by the time one tool has been approved the next tool or iteration is already hitting the market. This has caused analysis paralysis, leaving leadership teams avoidant about adopting any AI solution at all. This, coupled with a negative economic outlook, has led to a very cautious approach to innovation when it is ironically needed the most.

Companies must communicate clearly to show intent

Companies don’t need to have completed adoption plans to show intent to investors. Communication of a clear approach to AI adoption and how AI will add meaningful value to the business in the future will create conversation with investors whilst demonstrating long-term thinking and adaptability. A solution to demonstrating action to investors and improving boardroom adoption is communicating in a clear and compelling way. Making a compelling case for AI internally will help promote adoption by leadership teams. A focus on how current tools can make meaningful change and impact rather than worrying about tomorrow’s tools can be convincing. Framing the case for AI around risk and taking note of famous companies that failed to adapt, such as Kodak and Blockbuster, is an alternative approach to persuasion. This warning-led approach may seem more negative but leadership teams often listen more to the potential negatives than the positives.

“Investors are looking for companies that use AI for more than a productivity booster”.

The gap is that investors are looking for companies who see and are adopting AI as a part of their long-term plans whilst boardrooms are slow to adopt. Part of the solution is strong communication. Adapting how you talk to these different stakeholders will help build trust and help influence decisionmaking that will ultimately bridge the gap.

Get in touch

If you’d like to discuss this, or any other subject, please get in touch with Richard Costa, Consultancy Director, at richardc@gather.london

We’d love to know what you think.