Artificial Intelligence Hype and Analyst Earnings Forecast

Speculative practices such as trend-chasing and narrative-driven hype prevail in capital markets and pose substantial risks to the quality of the information environment. How to identify and govern discrepancies between firms' rhetoric and actual practices in promoting artificial intelligence (AI) activities constitutes a critical issue for the high-quality development of the AI industry. Using textual data from listed firms' annual reports and firm-level data on AI innovation and application from 2007 to 2023, this study constructs a novel measure of corporate AI hype. The results show that AI hype significantly exacerbates analyst forecast bias while failing to generate corresponding substantive innovation or application outcomes. Mechanism analyses indicate that this effect operates by elevating optimism among analysts and investors. Heterogeneity analyses further show that analysts' on-site visits, stronger professional competence, and a well-functioning external information environment help mitigate the misleading effects of AI hype, whereas firms' incentives for market value manipulation intensify these effects. Overall, the findings reveal corporate speculative behavior amid the AI wave and its implications for the capital market information environment, and provide useful insights for promoting the healthy development of AI and improving the standardization and credibility of information disclosure.