Biggest US companies warn of growing AI risk

More than half of the US’s biggest companies see artificial intelligence as a potential risk to their businesses, according to a new survey of corporate filings that highlights how the emerging technology could bring about sweeping industrial transformation.

Overall, 56 per cent of Fortune 500 companies cited AI as a “risk factor” in their most recent annual reports, according to research by Arize AI, a research platform that tracks public disclosures by large businesses. The figure is a striking jump from just 9 per cent in 2022.

By contrast, only 33 companies of the 108 that specifically discussed generative AI — technology capable of creating humanlike text and realistic imagery — saw it as an opportunity. Potential benefits include cost efficiencies, operational benefits and accelerating innovation, these groups said in their annual reports. More than two-thirds of that group specified generative AI as a risk.

The disclosures demonstrate that the impact of generative AI is already being felt across an array of industries and at the majority of the largest listed companies in the US.

The predictive machine learning technology has boomed over the past two years since OpenAI’s release of its popular chatbot ChatGPT in November 2022. Since then, Big Tech companies have invested tens of billions of dollars to develop powerful AI systems and hundreds of start-ups have launched to capitalise on the opportunity for disruption.

Among Fortune 500 companies, AI risks mentioned in annual financial reports this year include greater competition, as boardrooms fret they may fail to keep pace with rivals who are better exploiting the technology.

Other potential harms include reputational or operational issues, such as becoming ensnared in ethical concerns about AI’s potential impact on human rights, employment and privacy.

Some industries are more worried about AI than others.

More than 90 per cent of the largest US media and entertainment companies said that fast-growing AI systems were a business risk this year, as well as 86 per cent of software and technology groups.

Over two-thirds of Fortune 500 telecommunications companies and more than half of healthcare, financial services, retail, consumer and aerospace companies gave the same warning to investors.

For example, Netflix, the $290bn streaming service, warned that competitors could gain an advantage over it by deploying AI, which would affect “our ability to compete effectively and our results of operations could be adversely impacted”.

Telecoms group Motorola said: “AI may not always operate as intended and data sets may be insufficient or contain illegal, biased, harmful or offensive information, which could negatively impact” its earnings and reputation.

Some companies cited financial risks related to the evolving use of AI systems, such as mounting and unpredictable costs.

Salesforce, a software business valued at $250bn, said its adoption of AI “presents emerging ethical issues” around data collection and privacy. It said its profit margins could be affected by “uncertainty” around emerging AI applications, which meant it would likely have to commit greater investment to develop and test new models.

Legal, regulatory and cyber security AI risks were also a common theme among Fortune 500 companies.