LONDON, Feb. 3 (GeokHub) — European software, data analytics, and advertising stocks extended losses on Tuesday as growing concerns over artificial intelligence intensified doubts about whether established companies can protect their business models in an increasingly disruptive tech landscape.
The sell-off accelerated after the release of upgraded generative AI tools, which investors and analysts say could weaken the competitive moat of traditional software providers once seen as clear beneficiaries of the AI boom.
Shares of several companies providing professional and legal analytics services fell sharply, with some dropping more than 10% in a single session. Market participants said new AI-powered products are raising questions about pricing power, customer retention, and the ability of incumbents to generate returns from heavy AI investment.
Investors are increasingly reassessing the assumption that software firms would automatically emerge as long-term winners from artificial intelligence adoption. Analysts note that rapid AI innovation is compressing margins and increasing uncertainty around monetisation timelines.
The pressure has been particularly visible among Europe’s largest software names. Shares of some former market leaders have now fallen more than 40% from their recent peaks, reflecting a dramatic reversal in sentiment after years of strong gains.
Concerns have also spread to companies focused on professional services, education, and financial data, with broad-based declines across the sector. Analysts warn that valuation multiples could remain under pressure until firms clearly demonstrate sustainable, AI-driven revenue growth.
Advertising Sector Also Under Fire
Advertising companies were among the hardest hit, as investors reassessed how generative AI could reshape creative work, data analytics, and media buying. Several major advertising groups posted steep losses following earnings updates, despite increased investment plans targeting AI and data-driven technologies.
Recent investor surveys suggest advertising agencies are viewed as especially vulnerable to AI disruption, as automation threatens traditional services and client budgets shift toward technology-led solutions.
Analysts say companies hoping to reverse negative sentiment will need to clearly showcase revenue-generating AI products rather than simply highlighting future potential.
