AI Disruption Sparks Investor Exodus From At-Risk Stocks

Investors Shift Away From Stocks Vulnerable to AI Disruption

Artificial intelligence is reshaping the US financial markets in a profound way. Nvidia Corp. now holds the title of the world's most valuable company, valued at nearly $4.5 trillion. Meanwhile, AI startups like OpenAI and Anthropic have amassed tens of billions in funding.

However, this technological surge comes with challenges. Investors are increasingly wary of companies that could face declining demand as AI adoption spreads. Among those facing headwinds are web development firms such as Wix.com Ltd., digital image company Shutterstock Inc., and software giant Adobe Inc. These firms are part of a group of 26 companies identified by Bank of America strategists as most at risk from AI-driven disruption.

Market Performance Reflects AI Concerns

Since mid-May, this group has underperformed the S&P 500 Index by roughly 22 percentage points, after previously moving in line with the broader market since the release of ChatGPT in late 2022. The speed of disruption is faster than many expected. Daniel Newman, CEO of the Futurum Group, notes that what was predicted to take five years is now unfolding in around two.

Service-based companies with large workforces are particularly exposed, even if they have historically strong business models. The rise of AI-powered tools capable of writing code, answering complex queries, and generating creative content threatens traditional roles.

Notable Stock Declines Among AI-Risk Companies

• Wix.com and Shutterstock have dropped at least 33% in 2025, contrasting with the S&P 500's 8.6% gain.
• Adobe shares fell 23% amid fears that AI platforms could replace traditional image and video creation services.
• ManpowerGroup, providing staffing services potentially vulnerable to automation, is down 30% this year.
• Robert Half has lost over half its value, hitting a five-year low.

These declines reflect investor caution as AI reshapes industries ranging from advertising to recruitment.

AI's Broader Impact on Business Models

Even tech giants leading AI development, such as Microsoft Corp. and Meta Platforms Inc., are adjusting their workforce and investment strategies. Microsoft has cut jobs to improve productivity and refocus on AI initiatives. The widespread integration of AI is prompting concerns that some companies may not survive the transition.

For example, Gartner Inc., a market research firm, saw its shares plunge 30% in a single week after lowering its revenue forecast. While external factors like government policy were cited, analysts pointed to AI as a core threat that could provide cheaper alternatives to Gartner’s traditional services.

Historical Patterns of Technological Disruption

History offers many examples of new technologies rendering existing industries obsolete: telegraphs gave way to telephones, automobiles replaced horse-drawn carriages, and Netflix disrupted video rental stores. AI could similarly upend numerous sectors where human labor can be replaced by faster, more cost-effective automated solutions.

Adam Sarhan, CEO of 50 Park Investments, highlights industries like graphic design, administrative work, and data analysis as particularly vulnerable. Any company paying for tasks AI can perform more efficiently faces risk.

Contrasting Success Stories and Strategic AI Adoption

Some companies have successfully integrated AI into their business models. Duolingo Inc., for instance, has embraced AI to enhance its language-learning app. This strategy helped it raise its 2025 sales outlook and nearly double its stock price over the past year. Still, investors remain cautious about future AI generations.

AI Shapes Winners and Losers in 2025

After initial concerns that cheaper AI models from China might challenge US dominance, major players like Microsoft, Meta, Alphabet Inc., and Amazon have increased spending. Collectively, these giants plan to invest about $350 billion in capital expenditures this fiscal year, a nearly 50% increase from last year, largely to expand AI infrastructure. Companies like Nvidia benefit directly from this trend as their chips lead the AI computing market.

Evaluating Company Vulnerability

Assessing AI risk requires nuance. Alphabet, despite its leadership in AI technology and vast data resources, is included in Bank of America's risk list. Some view Alphabet as playing defense to protect its dominant search market, which has cast a shadow over its stock.

Advertising agencies face clear challenges. Omnicom Group Inc. has dropped 15% this year amid concerns that platforms like Meta aim to fully automate ad creation using AI. WPP Plc’s shares have fallen over 50%, highlighting the pressure on traditional advertising models before generative AI reaches full scale.

Investor Sentiment and Market Outlook

With many companies facing potential disruption, AI risk is becoming a key investment theme. Phil Fersht, CEO of HFS Research, describes the market environment as tough and unforgiving, reflecting widespread investor anxiety.

For finance professionals tracking AI’s impact, staying informed about which sectors and companies are vulnerable or poised to adapt is critical. For those seeking to deepen their understanding of AI’s role in finance and beyond, exploring specialized AI tools for finance and related courses can provide a strategic edge.