PayPal, IBM turn to A.I. to cut costs
In an earnings season where every company seems to need an artificial intelligence strategy, PayPal (PYPL) and IBM (IBM) are the latest to use the new technology to appeal to investors.
The evolving A.I. landscape, PayPal argues, will help the company operate more efficiently moving forward.
“We expect A.I. will enable us to meaningfully lower our costs for years to come,” PayPal CEO Dan Schulman said on the company’s earnings call. “Furthermore, we believe that A.I., combined with our unique scale and sets of data, will drive not only efficiencies, but will also drive a differentiated and unique set of value propositions for our merchants and consumers.”
While PayPal didn't explicitly say the cost-cutting impacts of A.I. mean fewer human workers, the announcement comes comes a week after IBM CEO Arvind Krishna told Bloomberg A.I. could replace nearly 8,000 of the company’s jobs. Krishna added that the technology could complete simple tasks like shifting employees between departments.
Still, the A.I. call-outs haven't necessarily meant positive stock returns. IBM shares are down since the Bloomberg story published, and PayPal stock fell more than 10% amid concerns over its outlook for margin growth.
Mentions of “A.I.” are up 64% year-over-year in earnings calls, per Bank of America research, but the use cases often vary.
There are companies, like Alphabet's Google (GOOG) and Microsoft (MSFT), who plan to use A.I. as a product to sell to other businesses. Others are powering A.I. with services and hardware like Nvidia (NVDA), which has seen its stock rise nearly 100% amid the A.I. boom.
PayPal’s A.I. pitch hits at the core of the current moment in the tech industry, though, with layoffs mounting and one of the sector’s largest players, Meta Platforms (META), touting a "Year of Efficiency.”
When asked on Monday’s earnings call how costs and operating expenses could be reduced beyond 2023, Schulman referred back to A.I.
“You're going to see our costs continue to come down year-over-year-over-year,” Schulman said. “And this is not just about efficiencies, by the way. It's not about just cost reduction. This is about doing things better. I think there's no question that A.I. is going to impact almost every function inside of PayPal, whether it be our front office, back office, marketing, legal, engineering, you name it.
"A.I. will have an impact and allow us to not just lower costs, but have higher performance and do things better.”
Josh is a reporter for Yahoo Finance.
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