New York – The traces of artificial intelligence (AI) on US financial markets are unmistakable. Nvidia is the most valuable company in the world at USD 4.5 trillion (S$5.8 trillion). Openai's startup to humanity has raised hundreds of billions of dollars.
But new technologies that investors are increasingly paying attention to are threatening to promote the industry as the Internet has done. Investors have also betted where the confusion will occur next. Some strategists can throw away stocks in companies that they expect to see demand obstacles as AI applications become more widely adopted.
Among them are web development companies such as Wix.com, Digital-Image Company Shutterstock, and software maker Adobe. The trio is part of a basket of 26 Bank of America strategists identified as having little 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, with tech giants like the Microsoft and Meta platforms pouring hundreds of billions into AI, investors are beginning to become more defensive.
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 stocks were routed after a market research firm reduced its annual revenue forecast. Stocks fell 30% in 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.
There are many historical precedents for new technologies that wipe out industry. Telegraph gave way to the phone, horse cleaning and buggy fell to cars, and Netflix's eradication of blockbusters exemplified internet confusion.
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. Despite many AI companies offering instant translation services, Duolingo, the owner of language learning apps, has soared due to 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 there are concerns that next-generation AI will become a threat.
As AI re-emerged as the dominant theme between stock market winners and losers in 2025, defensive moves from investors have been a tough reversal since early 2025 when China's cheap, developed AI models posed questions on the ground and raised concerns that spending on computing gear would slow down.
Instead, Microsoft, Meta, Alphabet and Amazon have doubled their spending. Analyst estimates compiled by Bloomberg show that the four companies are expected to spend around US$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 enormous share of the profitable internet search market has long been holding stocks.
For other companies, the risk seems more clear. The Advertising Agency Omnicom Group fell 15% in 2025. This is because we are facing a future where we are reportedly trying to fully automate the creation of AD through AI. Peer WPP has decreased by more than 50%.
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,” Farscht said. “This will be a tough, merciless market.” Bloomberg
