"Generative AI's Impact on Companies and Industries"

A new study shows that generative AI will impact firms' labor inputs and market valuations. Firms whose labor force can be substituted for with cheaper generative AI-based capital will experience higher free cash flows by lowering input costs. Firms whose labor inputs are more complementary to generative AI will experience higher cash flows due to the technological improvement in an input that is complementary to their workforce. Companies like IBM and Microsoft are among the major US firms most exposed to generative AI. The impact of the release of ChatGPT on firm values varies widely across industries, as well as within industries across firms.