Artificial Intelligence Innovation and Stock Market Returns: Some International Evidence

Guglielmo Maria Caporale, Ida Colella, Fabio Spagnolo and Nicola Spagnolo

No 13112, CESifo Working Paper Series from CESifo

Abstract: This paper examines the relationship between artificial intelligence (AI) innovation and stock market returns across 61 countries over the period 2010–2022. Using AI-related patent families as a proxy for AI innovation, it investigates whether AI patenting activity is associated with subsequent national equity market performance. The empirical analysis employs a panel regression framework with country fixed effects and explores geographical heterogeneity across three regional subsamples, the EU and the UK, Asia, and the Rest of the World, as well as the G7 economies. The results indicate a positive relationship between lagged AI patenting activity and annual stock market returns, although the strength and statistical significance of this association vary across country groups. The most robust evidence is found for the EU and UK and the G7 economies, where the estimated coefficients are positive and statistically significant. By contrast, the association is weaker in Asia and statistically insignificant in the Rest of the World. These findings contribute to the literature on technological innovation and financial markets by providing cross-country evidence on the relationship between AI innovation and equity market performance. They also highlight the geographical heterogeneity of this relationship, suggesting that differences in financial market structures and technological development may play a role in shaping how AI innovation is reflected in stock market returns.

Keywords: AI; stock market returns; panel data; fixed effects (search for similar items in EconPapers)
JEL-codes: C33 G12 G18 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_13112

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