Concerns Over AI Technology Drive Down European Software Stocks

Impact of AI on European Software and Advertising Stocks

By Samuel Indyk and Danilo Masoni

Sell-off in Software Companies

LONDON, Feb 3 (Reuters) - A sell-off in European software, data analytics and advertising companies accelerated on Tuesday, as updated artificial intelligence models raised fresh doubts about whether incumbent firms can defend their business models, underscoring the technology's disruptive threat to sectors once viewed as AI winners.

Advertising Sector Under Pressure

One of the catalysts for Tuesday's selloff was the introduction of Anthropic's legal plug-in for its Claude generative AI chatbot, according to traders and analysts.

Investor Sentiment and Future Outlook

The move sent shares in both Britain's RELX and the Netherlands' Wolters Kluwer, which both provide analytics services to the legal industry, down over 10%.

"The software companies were assumed to be winners from AI," said Lars Skovgaard, senior investment strategist at Danske Bank.  

"But all of a sudden, you start to worry about whether you can earn the money back (from your AI investments), and/or will you be outsmarted by updates coming in."

Shares in RELX have now slumped over 45% from their peak last February. 

The dramatic reversal in RELX's share price, which had become one of the 10 largest listed companies in Britain last year, is an example of the impact AI is having on Europe's software sector.

Germany's SAP, which less than a year ago was Europe's most valuable company, slumped over 16% last week, after its cloud revenue forecast failed to meet expectations, which wiped off $40 billion in one day. Its shares were down 1.9% on Tuesday and down 40% from last year's high. 

"We maintain the view that deflationary pressure on software-sector multiples could persist as long as the organic monetisation of AI is not clearly demonstrated," said Maximilien Pascaud, analyst at Baader Bank in a note where he cut his target on SAP, while keeping an add rating.

Other companies that specialise in professional services were also down. 

Experian, Sage Group, London Stock Exchange Group and Pearson were down between 4.2% and 8%. 

ADVERTISING COMPANIES HIT

Advertising companies were also under pressure. France's Publicis shares dived over 8.5% after the company's results. 

Publicis, the world's largest advertising group by market capitalisation, said it had earmarked approximately 900 million euros ($1.06 billion) for acquisitions in 2026, focusing on AI-powered technologies and data assets. 

According to a Barclays survey of buy-side investors published on Monday, advertising agencies are seen as the most exposed part of European media to artificial intelligence, with WPP, Omnicom and Publicis ranked the top "AI losers".

Analysts at the bank said companies could most effectively shake off an “AI loser” label by launching and clearly promoting revenue‑generating AI products. 

($1 = 0.8481 euros)

(Reporting by Samuel Indyk and Danilo Masoni; Editing by Amanda Cooper)