Copyright Business Insider
One of the biggest questions in the market right now is how effective AI will be in raising profit margins. Tech firms are dumping billions of dollars a year into building out infrastructure to support the technology, helping to propel US economic growth and stock-market gains. But will it ever pay off? For one company, the answer is already yes. And its stock is already seeing the benefits in a big way. Shares of CH Robinson (CHRW), a freight logistics firm, are up 49% year-to-date. After the company's Q3 earnings report last week, the stock jumped about 20% in a single day. The stock is moving so dramatically because the company has begun using generative AI, said Travis Prentice, the founder of the Informed Momentum Company. AI is able to provide price quotes, book appointments, respond to emails, and process orders for the firm, allowing its shipments per person per day to have increased by 40% since 2022. Meanwhile, CH Robinson has reduced its employee base by more than 10%, boosting margins amid a 12% decline in expenses. Here's a chart showing the firm's productivity and profit margin gains over the last few years. "Not the most sexy business in the world, but when everyone talks about AI and there's no ROI with AI, this is a massive exception to the rules," Prentice told BI. "It's driving productivity gains of like 40-50%." "That's a story that no one's really talking about — AI is actually improving business operations," he continued. "They're one of the outliers, but I'm sure there's gonna be a lot to follow when they see the gains that they're having."
