UBS is framing AI as a key differentiator for equity returns in Europe, noting a growing split between companies that benefit from the technology and those that face acute disruption risk. Over the last three years, the bank reports that AI enablers have climbed 85% while AI adopters have risen 40%, whereas stocks judged vulnerable to AI disruption have lost about 50% in value.
To arrive at that conclusion, UBS applies an AI-driven assessment that quantifies both opportunity and risk. The bank describes its AI Risk Scores as measures of a company's susceptibility to substitution by AI, downward margin pressure or regulatory challenges. The methodology is intended to single out business models where AI could directly undermine the core economics of a firm.
How UBS defines high-risk characteristics
UBS highlights several common characteristics among names it considers most exposed. High-risk profiles tend to exhibit visible pricing pressure, workflows that are straightforward to automate, or weak intellectual property protection. Those factors, the bank says, amplify the chance that AI-driven tools could substitute for existing services or content.
Labour- and seat-based services face the most immediate threat
The bank identifies labour- or seat-based service providers as the group currently under the most immediate pressure. Firms built around selling human time - exemplified by companies such as Capgemini, Adecco and Teleperformance - are vulnerable because AI can automate a range of tasks, from coding to customer support and candidate matching. UBS warns that such automation can push prices down and reduce demand for billable human hours unless these firms shift toward AI-powered offerings or outcome-based contracts.
UBS points to investor reactions in the software and services sector as evidence of changing sentiment. The MSCI Europe Software & Services Index, the bank notes, has underperformed by 17% over the past month amid rapid advances in AI-driven coding and automation.
Platform gatekeepers and listing businesses
Gatekeeper platforms that rely on paid listings and visibility are also under pressure, UBS says. AI tools capable of aggregating information across multiple websites could reduce the value of paid placements on platforms such as Rightmove and Auto Trader, unless those platforms can demonstrate they provide higher-quality leads or proprietary data that cannot be replicated by aggregation tools.
Advertising, content and IP custodians
Advertising and creative content businesses are another area of concern. UBS notes that AI substantially lowers the cost of producing ads and creative material, which may prompt clients to bring work in-house or depend on automated solutions. That dynamic could weigh on traditional ad production houses and legacy TV formats.
Publishers and content owners that rely on proprietary intellectual property are also exposed: UBS points to companies such as Ubisoft and Pearson as potentially vulnerable if AI-generated content competes with or diminishes the value of existing rights.
Widening IT-sector divergence
More broadly, UBS draws a clear line within the IT sector between structural winners and firms facing disruption. The bank contrasts labour-intensive, seat-based IT providers with well-embedded enterprise platforms. As an example of the latter, UBS highlights SAP - which UBS says sits within core enterprise architecture, is experiencing 30% cloud growth as AI accelerates migrations, and expects €2 billion in future cost savings.
Given this split, UBS argues stock selection matters: it is important to separate companies genuinely at risk from those early adopters that are delivering essential, hard-to-replace enterprise services.
Investor behaviour and the next phase of the AI trade
UBS also cautions that investors have been aggressive in buying AI enablers and selling names perceived as vulnerable - sometimes too indiscriminately, the bank suggests. It argues the next stage of the AI trade may favour adopters that can demonstrate measurable improvements in profitability rather than pure infrastructure plays alone.
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