AI Stock Swings Show Split Among Europe’s Analysts and Investors

Julien Ponthus and Michael Msika

Thu, February 26, 2026 at 7:46 PM GMT+9 4 min read

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UBS

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Bloomberg, UBS

(Bloomberg) – Equity analysts still attach attractive valuations to many European stocks at the heart of the selloff over artificial intelligence disruption fears, revealing a sharp contrast with investors over how to assess companies in the frontlines of the AI reckoning.

UBS Group AG’s EU AI Risk basket — a collection of 34 recruitment firms, media groups, and business services providers facing potential AI upheaval — has plunged 38% in a year. Yet target prices set by sell-side analysts imply that the cohort trades at an average 51% discount, suggesting they see strong recovery potential in the very names the market is discarding.

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“There’s a chance that the sell side is underestimating the disruption from AI whereas investors are taking a hard approach,” said Fares Hendi, portfolio manager at Societe de Gestion Prevoir. “I’m not touching any sector the market is refusing to buy.”

Recent extreme moves spurred by the AI discussion have underscored a common theme in markets. As a group, analysts tend to be bullish on stocks, so it’s not unusual for wide gaps to open up during a sharp selloff, especially when equities are moving on highly speculative reasons.

The divide also highlights differences in how analysts and markets tend to price stocks. While traders may move quickly to buy or sell stocks on even the most hypothetical scenarios — like the recent Citrini Research report on an AI scenario — analysts rely on more conventional metrics, assessing corporate guidance and cash flow modeling at a slower pace.

Portfolio managers have instead piled into proven AI infrastructure plays. UBS’s EU AI Winners basket of 27 semiconductor equipment makers and industrial automation companies has surged 25% over the same period. The rally means these stocks essentially trade near fair value, just 3% short of the levels targeted by analysts.

HSBC Holding Plc analysts, for example, wrote this week that software — a sector caught in the cross-hairs of the selloff — should start to achieve monetization from advances in AI this year.

Incumbent software companies have developed reliable products over decades that new competitors would find extremely difficult to displace at major global firms, the HSBC team including Stephen Bersey said in a client note. “We believe software will be the primary mechanism for the diffusion of AI across the world’s largest enterprises,” they wrote in a report titled “Software Will Eat AI.”

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Earnings Disruption

The divide has widened as companies like Anthropic PBC roll out AI tools capable of performing complex white-collar tasks, ranging from coding to customer service. Investors are pricing in existential threats to business models built on human labor, while analysts maintain that adaptation and integration will preserve value.

There is faith among the sell side that stocks currently crumpling under AI risks can successfully navigate a transition. The buy-side clearly disagrees.

“What’s difficult for the sell side, and I say having been an analyst myself, is that they can’t compute in their models a disruption which doesn’t yet show in the earnings,” said Thomas Brenier, head of equities at Lazard Freres Gestion. “We haven’t really seen the effects of the disruption in earnings, so how can one price them on a spreadsheet?”

Brenier expects analysts to gradually shift their views. “They are not randomly going to cut, say 2028 sales by 25% just because the market is selling today,” he said. “It will surely take time for the sell side to adjust their consensus as the year goes by.”

Stocks in the risk basket span recruitment — Hays Plc, PageGroup Plc and Randstad NV, along with media and advertising — ITV Plc, Publicis Groupe SA and WPP Plc. They also include technology service providers, such as Alten SA, Capgemini SE and Sopra Steria Group, which like the others are businesses where AI threatens to automate core functions.

The AI winners basket concentrates on semiconductor equipment companies like ASML Holding NV and ASM International NV, industrial automation firms like ABB Ltd. and Siemens AG, and electrical infrastructure providers like Legrand SA and Schneider Electric SE.

It’s the sort of dislocated and dispersed market that some would argue offers an ideal opportunity for stock pickers. For others, the elevated volatility suggests they are better off sitting on the fence for now.

“I’m sure there are many market aberrations out there, but I’m not going contrarian,” said Hendi at Societe de Gestion Prevoir. “I’d rather wait for a stock to rebound 50% to buy it rather than to try to catch a falling knife.”

–With assistance from Henry Ren and Lynn Thomasson.

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