Shares of major European companies investing heavily in artificial intelligence plunged this week, as the rollout of more advanced AI models raised concerns that sectors from software to data analytics could be overtaken by the technology. Software giants like Germany’s SAP and France’s Dassault Systemes saw steep declines on Tuesday, following similar drops in U.S. rival Adobe after a downgrade by Melius Research. Since mid-July, London Stock Exchange Group, UK software firm Sage, and France’s Capgemini have fallen 14.4%, 10.8%, and 12.3% respectively.
The selloff comes despite these companies—dubbed “AI adopters”—being previous investor favourites in Europe due to the region’s lack of homegrown AI suppliers. The release of more powerful AI models such as OpenAI’s GPT-5 and Anthropic’s Claude for Financial Services has intensified fears that these firms’ business models could be challenged. Analysts warn that the high valuations of these stocks make them especially vulnerable to negative sentiment, with SAP now trading at about 45 times earnings compared to the STOXX 600 average of 17.
While the broader market remains resilient—London’s FTSE 100 has gained 2.5% and Europe’s STOXX 600 is up 0.6% since mid-July—investors are reassessing which software companies can withstand the AI disruption. Experts say firms with deeply embedded software in client operations or exclusive, hard-to-replicate data stand a better chance of surviving the wave. Companies like UK credit data firm Experian and software provider Sage are cited as examples of those with strong integration into customer workflows, though analysts caution that proprietary data alone may no longer be sufficient protection.
Some fund managers view the downturn as an opportunity to identify future winners that can turn AI into a growth driver. However, others warn that time is running out for heavy AI spenders to demonstrate tangible returns. Until the market sees proof of AI boosting earnings, investors may continue to treat many AI adopters as high-risk bets despite their potential long-term advantages.