(Bloomberg) – The imprinting of artificial intelligence on US financial markets is unmistakable. Nvidia Corp. is the most valuable company in the world, with nearly $4.5 trillion. Openai's startup to humanity has raised hundreds of billions of dollars.
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However, new technologies that investors are increasingly paying attention to have the drawback of threatening to promote the industry as the Internet did. And investors began betting where the confusion would occur next. Some strategists can throw away stocks in companies that they expect to see a collapse in demand as AI applications become more widely adopted.
These include web development companies such as Wix.com Ltd., Digital-Image Company Shutterstock Inc., and software manufacturer Adobe Inc. The trio is part of a basket of 26 Bank of America strategists identified as at most risk for AI. The group has been on the market more or less since the mid-May, and has been about 22 percentage points below the S&P 500 index since mid-May after continuing to follow the market more or less since ChatGPT's debut in late 2022.
“The confusion is real,” said Daniel Newman, CEO of Futurum Group. “We thought it would happen for five years. It seems to happen in two. Service-based businesses with a large population will become truly vulnerable, even if they have robust businesses from past eras in technology.”
So far, few companies have failed as a result of a surge in chatbots and so-called agents that can write software code, answer complex questions and create photos and videos. However, investors are beginning to become more defensive as tech giants like Microsoft Corp. and Meta Platforms Inc. are pouring hundreds of billions into AI.
Wix.com and Shutterstock fell at least 33% in 2025, compared to the broad benchmark 8.6% advance. Adobe has already done it with AI-generated ads, which has dropped by 23% amid concerns considering an AI platform that allows clients to generate images and videos. ManPowerGroup Inc., whose staffing services can be hurt by rising automation, has fallen 30% this year, but Peer Robert Half Inc. has reduced more than half its value, dropping to its lowest in more than five years.
It creates sour sentiment among investors as AI changes everything from the way it gets information from the internet to the functions of universities. Even companies pioneering technology development like Microsoft are cutting back on jobs as they are more productive and give way for more AI investments. For many high-tech industry watchers, AI has become so widespread that it is approaching the time for businesses to start going out of business.
Anxieties over the impact of AI on existing companies were on display last week when Gartner Inc. stocks were routed last week after a market research firm reduced its revenue forecast for the year. The stock price fell 30% over five days, the largest weekly decline on record.
The company denounced US government policies such as spending cuts and tariffs, but analysts were quick to point to AI. Investors were afraid that the company could offer a cheaper alternative to Gartner's research and analysis, despite the company deploying its own AI-based tools.
Morgan Stanley said the results “added fuel to AI destruction cases,” while Baird said “the risks of AI that are gradually involved have an impact.” A Gartner representative did not respond to requests for comment.
There are many historical precedents for new technologies that wipe out industry. Telegraph gave way to the phone, horse cleaning and buggy collapsed on cars, and Netflix Inc.'s eradication of BlockBuster exemplified internet disruption.
Adam Sarhan, CEO of 50 Park Investments, said: “Companies paying someone to do things that AI can do faster and cheaper, think about graphic design, management work, data analysis.”
Of course, many companies that were expected to be hammered by AI are thriving. While many AI companies offer instant translation services, Duolingo Inc., the owner of language learning apps, has skyrocketed because of the way it implemented AI into its own strategy after raising its sales outlook for 2025. Stocks have almost doubled over the past year, but it has to do with the next generation of AI becoming a threat.
As AI re-emerged as the dominant theme between winners and losers this year in the stock market, it creates defensive moves from investors. It was a tough turnaround since the start of 2025, when cheap AI models were developed in China, when it raised doubts on-site control and concerns that spending on computing gear was set to slow down.
Instead, Microsoft, Meta, Alphabet Inc. and Amazon.com Inc. have doubled their spending. Analyst estimates compiled by Bloomberg show that the four companies are expected to spend around $350 billion on total capital expenditures for the current fiscal year. Many of them fund the creation of AI infrastructures that benefit companies like NVIDIA, which dominates the AI computing market.
Understanding which companies are vulnerable to technology requires a little more nuance. Alphabet is widely viewed as one of the best companies with cutting-edge features and top-notch talent and data. But it's a component of Bank of America's AI risk basket, and it feels like it's defending – protecting the vast share of the profitable internet search market has long been taking stocks.
For other companies, the risk seems more clear. Advertising Agency Omnicom Group Inc. fell 15% this year as it faces a future that is reportedly trying to fully automate advertising creation through AI. Peer WPP PLC has decreased by more than 50%.
“Traditional advertising agency models are under intense pressure, and that's before Genai really starts to expand,” wrote Michael Nathanson, senior analyst at Moffettnathanson, in a research note.
According to Phil Fersht, CEO of HFS Research, it is an investment theme that is poised to intensify as so many companies face AI risks.
“There's clearly a sense of uncertainty on Wall Street,” Fersht said. “This will be a tough, merciless market.”
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