The key to profitable Earnings per Share: AI

Dec 20, 2023

2 minutes, 40 seconds

Artificial intelligence (AI) has arisen as a driving force in today’s modern business world. And as soon as 2030, a significant portion of the labor force’s hours—approximately 30%—could be fully automated (McKinsey, 2023). For organizations savvy enough to leverage the transformative potential of AI, this shift can potentially increase earnings per share (EPS). Embracing AI is more than a technological upgrade; it’s the roadmap to devising optimal strategies for maximizing EPS in 2024 and in the years to come.

AI transcending revenue

AI implementation extends well beyond revenue generation. Rather it could be considered a triple threat, contributing not only to revenue growth but also amplifying operational efficiency and elevating customer service standards. With its unrivaled capacity to handle tasks at high volumes and velocity, AI is uniquely positioned as a cost-minimizing tour de force, freeing up human capital to carry out tasks that demand creativity, strategic thinking or both (Tech Target, 2023).

Nvidia Paradigm 

Consider Nvidia’s recent integration of AI into their data center business (CNBC, 2023). The outcome was a jaw-dropping $10.32 billion in data center revenue, marking a 171% increase. But the impact on EPS was equally as profound, with earnings soaring to $2.70 per share, adjusted, surpassing the expected $2.09 per share. The revenue surge, reaching $13.51 billion compared to the anticipated $11.22 billion, underscores the transformative potential of AI in generating revenue and, consequently, increasing EPS (Goldman Sachs, 2023).

Scalability through automation

Immediate gains notwithstanding, the calculated use of generative AI additionally positions companies for sustained growth, with the ability to automate resource-intensive tasks not only boosting existing revenue but setting the stage for scalability. This becomes increasingly pivotal to future success, especially considering AI’s potential to continually evolve and adapt to changing landscapes (Tech Target, 2023).

AI as a strategic tenet

AI adoption can be a deliberate maneuver companies can enact to reimagine how their businesses operate and, perhaps more importantly, how they generate earnings. Large language models and generative AI are anticipated to play an extremely pivotal role in boosting productivity and reshaping overall industries. A recent report suggests that harnessing AI can lead to significant positive effects on productivity growth and innovation, with the potential to impact a wide range of occupations and activities. Despite challenges and uncertainties, embracing AI as a central component of operations can position organizations for continued growth in the years to come (Brookings, 2023).

Navigating the AI-driven future

As businesses navigate towards Q1 2024, the question du jour is not whether to adopt AI but how to deliberately tap into its power for increased EPS. AI is not some new-fangled technology; it’s a calculated imperative for any organization hoping to thrive in this brave new world where inventiveness and financial success go hand in hand.

The road to success is paved with AI-driven innovation, urging businesses to chart their course and seize opportunities for a future defined by technological prowess and financial prosperity. Businesses embracing AI today won’t simply stay competitive, they’ll lead the charge toward a tomorrow in which AI is the key to profitable earnings per share. 

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