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US companies are reportedly discussing cost control on earnings calls at a record rate. According to a report in Bloomberg, quoting an analysis by Morgan Stanley strategists, the push for cutting cost comes amid the thrust to reallocate funds and invest in new technologies.
Transcript mentions of “operational efficiency” are at highest ever in the US during this earnings season as companies focus on expense discipline, but also invest in technologies “that can drive future productivity like AI,” a team led by Michael Wilson wrote in a note.These two words — “operational efficiency” — are said to dominate most earnings calls. There are other similar phrases for them like fiscal discipline, expense cutting and more.
There is a notable overlap among the industries discussing operational efficiency and those that are discussing AI, the strategists said. These companies include not only technology companies, but also those in professional services, health care services and financial services.
According to data compiled by Bloomberg, the S&P 500 companies touting operational efficiency in their earnings calls comprise Pfizer Inc, BlackRock Inc and Lam Research Corp.
Cutting jobs: Walt Disney to Levis to Estee Lauder
Managing expenses has reportedly been a key theme this season. Walt Disney Co recently said that profit this year will rise at least 20% thanks to cost cutting. Hertz Global Holdings is looking to reduce costs and Levi Strauss & Co said a new initiative to boost efficiency will include cost-cutting operations like cutting jobs.
Some companies are also reallocating these funds to grow their business. Estee Lauder is cutting jobs as part of a revamp plan that it said will allow it to respond more quickly to new beauty trends and invest more in its brands. Facebook parent Meta Platforms Inc is spending aggressively on artificial intelligence advancements while ecommerce giant Amazon.com is cautious about new investments.
Morgan Stanley’s Wilson recently listed AI poster boy Nvidia, iPhone maker Apple, software giant Microsoft Corp and search behemoth Alphabet among high-quality growth stocks that have overweight ratings from the bank’s analysts.
Transcript mentions of “operational efficiency” are at highest ever in the US during this earnings season as companies focus on expense discipline, but also invest in technologies “that can drive future productivity like AI,” a team led by Michael Wilson wrote in a note.These two words — “operational efficiency” — are said to dominate most earnings calls. There are other similar phrases for them like fiscal discipline, expense cutting and more.
There is a notable overlap among the industries discussing operational efficiency and those that are discussing AI, the strategists said. These companies include not only technology companies, but also those in professional services, health care services and financial services.
According to data compiled by Bloomberg, the S&P 500 companies touting operational efficiency in their earnings calls comprise Pfizer Inc, BlackRock Inc and Lam Research Corp.
Cutting jobs: Walt Disney to Levis to Estee Lauder
Managing expenses has reportedly been a key theme this season. Walt Disney Co recently said that profit this year will rise at least 20% thanks to cost cutting. Hertz Global Holdings is looking to reduce costs and Levi Strauss & Co said a new initiative to boost efficiency will include cost-cutting operations like cutting jobs.
Some companies are also reallocating these funds to grow their business. Estee Lauder is cutting jobs as part of a revamp plan that it said will allow it to respond more quickly to new beauty trends and invest more in its brands. Facebook parent Meta Platforms Inc is spending aggressively on artificial intelligence advancements while ecommerce giant Amazon.com is cautious about new investments.
Morgan Stanley’s Wilson recently listed AI poster boy Nvidia, iPhone maker Apple, software giant Microsoft Corp and search behemoth Alphabet among high-quality growth stocks that have overweight ratings from the bank’s analysts.
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