European AI Adopter Stocks Face Sharp Declines
Shares of major European companies investing in artificial intelligence tumbled this week as the release of powerful new AI models raised concerns about potential disruption across software, data analytics, and IT services.
Germany’s SAP and France’s Dassault Systèmes were among the hardest hit on Tuesday, following a downgrade of U.S. software giant Adobe by Melius Research on Monday. Since mid-July, UK’s Sage Group, Capgemini, and London Stock Exchange Group (LSEG) have also posted steep declines.
Heavy Losses for AI Adopters
According to market data, the selloff since mid-July has been significant:
- Sage Group: –14.4%
- Capgemini: –12.3%
- Markets & Data firms: –10.8%
- SAP & Dassault Systèmes: Notable drops on Tuesday
These “AI adopter stocks” have been investing heavily to integrate AI into their products and services. In the absence of a large number of pure-play European AI developers, these companies had become regional favourites for investors seeking exposure to the AI boom driving U.S. tech markets.
Disruption Concerns Sparked by GPT-5 and Claude
The market reassessment followed the launch of OpenAI’s GPT-5, the latest generation of the AI model behind ChatGPT, and Anthropic’s Claude for Financial Services on July 15.
Kunal Kothari, Fund Manager at Aviva Investors, noted that Claude’s release directly challenges the investment case for LSEG by providing advanced AI-driven financial data capabilities.
“With each iteration of GPT or Claude, the technology becomes multiples more capable,” Kothari said. “That’s when the market starts thinking — this could disrupt existing business models.”
Market Divergence: Europe vs. U.S.
While European AI adopter stocks have slumped, broader markets remain resilient:
- FTSE 100: +2.5% since mid-July
- STOXX 600: +0.6%
- U.S. Indexes: Hitting record highs, driven by tech stocks
The contrast highlights growing investor caution in Europe as AI technology advances faster than expected.
High Valuations Add to the Pressure
Bernie Ahkong, Chief Investment Officer at UBS O’Connor, warned that high valuations for European AI adopter stocks make them particularly vulnerable to negative news. With markets now pricing in the possibility of AI replacing, rather than enhancing , existing business models, sentiment may remain fragile.
Key Takeaway: AI Advancements Bring Opportunity and Risk
The rapid evolution of next-generation AI models is forcing investors to rethink the growth potential of established European software and IT service providers. While AI offers long-term opportunities, the immediate risk lies in technological disruption outpacing business adaptation.
