Global interest in artificial intelligence appears to be moving beyond general enthusiasm and toward a narrower focus on companies that can demonstrate concrete operational advantages, according to strategists at Citi.
That adjustment follows a period of volatility in stocks tied to AI and increasing investor scrutiny about the returns from large capital expenditures. Citi analysts observed that the broad "global AI trade" is becoming more selective as worries grow around technological displacement in areas such as software and the payback on heavy capex programs.
Yet the bank's strategists argue this market repricing could set the scene for what they call an "AI moment" in Europe, a phase where attention turns from enabling technologies to the measurable productivity gains that come from applying AI across business operations.
Macro picture and investment backdrop
At a macroeconomic level, however, the effects of AI remain hard to detect. Citi's economists say Europe is still early in its AI adoption cycle. To date there is limited evidence that AI has materially raised GDP growth or labor productivity across the region.
Instead, the current phase looks largely investment-driven: companies and economies are increasing spending on infrastructure, software, data and skills rather than delivering immediate productivity uplifts.
Measured investment in AI-related activity within the European Union has already reached roughly 250 billion, which Citi notes is about 1.2% of EU GDP. That level still trails the United States, where AI investment is about twice as large relative to the size of the economy.
From enablers to adopters: sectoral implications
Citi's equity strategists describe an evolution in the AI trade. Early phases favored the companies that provide the foundations of AI - semiconductors, data centers and other infrastructure - while the next phase will emphasize companies that embed AI into their everyday operations and thereby extract productivity gains.
Across sectors, the bank highlights industrials, health care, information technology, communications services and financials as areas with notable potential to benefit from AI-driven productivity improvements. Strategists say the transition from selling the tools of AI to deploying those tools internally will be especially relevant in markets with smaller direct exposures to the technology sector, such as many European markets.
To articulate these themes, Citi has constructed two baskets of European stocks. One basket gathers "enablers" - firms that supply infrastructure and components for AI. The other groups "adopters" - companies expected to capture operational improvements from AI uptake.
Names cited among the enablers include Siemens, Schneider Electric, ABB, Legrand, ASML and Deutsche Telekom. Companies listed as adopters encompass HSBC, EssilorLuxottica, Volkswagen, BBVA, UBS, Siemens and SAP among others.
Investor takeaways
Investors and market participants should note that the immediate economic payoff from AI remains uncertain, with current activity skewed toward building capabilities rather than delivering measurable productivity or GDP gains. At the same time, the shift in market focus toward firms that can turn AI into operational benefits may create differentiated opportunities across multiple sectors in Europe.
How quickly and broadly those productivity gains materialize will determine whether Europe realizes a pronounced "AI moment." For now, Citi frames Europe as potentially well positioned to benefit disproportionately from the next phase of AI adoption, even as the macroeconomic signal of such benefits remains limited.