New Technologies and Stock Returns

64 Pages Posted: 23 Dec 2022 Last revised: 27 Nov 2023

Date Written: December 11, 2022


This paper documents high returns from stocks of companies exposed to new technologies, attributing this to uncertainty in future cash flows. I identify new technology patent publications each year using a graph-neural network model. The exposure of firms to new tech is computed based on their recent patent publications. A portfolio contrasting high- and low-new tech exposures yields a 0.6% monthly return and 0.47%-1.15% alphas. The high returns involve substantial risk premiums required by risk-averse investors. New tech exposure positively correlates with idiosyncratic volatility. The findings illuminate the positive relationship between idiosyncratic risk and stock returns.

Keywords: New Technology, Portfolio Analysis, Uncertainty and Expected Stock Returns, Idiosyncratic Volatility

JEL Classification: G11, G12, G14, O32

Suggested Citation

Kim, Jinyoung, New Technologies and Stock Returns (December 11, 2022). Available at SSRN: or

Boston College

Carroll School of Management
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