Barclays has warned that equities perceived as susceptible to disruption from artificial intelligence could face an extended period of selling pressure, driven more by sentiment than by fundamentals. The bank described investor behavior as a "sell first, think later" mentality that is increasing market dispersion and producing uneven performance across industries.
In a client note, analyst Emmanuel Cau acknowledged that overall equity markets have shown resilience, but said that concerns about AI-driven dislocation are producing "choppiness and more dispersion across sectors." That dynamic, Barclays said, has upended traditional stock classifications such as cyclicals versus defensives.
Instead of familiar groupings, markets now appear to cluster companies according to perceived "AI immunity or vulnerability." Barclays identified hard-asset and so-called old-economy areas - including commodities, industrials, materials, healthcare and consumer goods - as being treated by investors as relatively AI-immune. By contrast, many consumer or commercial services and technology-related industries are being labelled as vulnerable.
The bank also traced how the list of perceived AI losers has widened. Barclays wrote that the narrative began with media and business services, extended into software, and has now reached financial services, logistics and commercial real estate. Within that cohort, selling pressure has become indiscriminate, the bank said, driven more by narrative than by underlying company fundamentals, even while "EPS momentum remains resilient."
Barclays cautioned that investors are increasingly asking "who is next," applying little tolerance for firms that are remotely perceived as AI losers. The bank added that these worries are spilling into credit markets and are starting to weigh on banks, which had up to now been seen by some as AI winners.
Concluding on near-term prospects, Barclays said momentum may be unstoppable in the short run, with no clear catalyst identified to halt the rout. At the same time, the bank noted that the dislocation could create long-term opportunities for investors able to look past near-term sentiment.
Context and implications
The note frames the current market action as a narrative-driven re-rating that reorganizes investor preference around AI exposure rather than traditional economic characteristics. That shift is producing greater dispersion in returns and is affecting both equity and credit markets.
For market participants, Barclays' assessment highlights a period in which sentiment can dominate price discovery, leaving fundamentals - including resilient earnings momentum - temporarily sidelined.