This box examines how exposure to artificial intelligence (AI) is reflected in the market-based financing conditions of European firms. Using a novel firm-level measure of AI exposure derived from the earnings call transcripts of STOXX Europe 600 constituents, we show that AI exposure extends beyond a narrow set of infrastructure providers and hyperscalers, encompassing a broader range of firms that adopt AI for product innovation or productivity gains. Panel regressions show that AI-exposed firms earn a robust equity return premium of around 1.3 percentage points per quarter and pay significantly lower option-adjusted spreads on their corporate bonds, while also issuing a relatively higher share of long-dated debt. These patterns indicate that AI exposure is priced into both equity and corporate bond markets across the wider economy in Europe and is more broadly distributed than the concentrated market rally would imply.
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