AI selloff may remain unstoppable near term, Barclays says

Investing.com -- Barclays warned that the rapid, sentiment-driven selloff hitting companies perceived as vulnerable to artificial intelligence could persist, with investors remaining in what the bank described as a “sell first, think later” mindset.

Analyst Emmanuel Cau told clients in a note that equity markets are showing resilience, but fears over AI-driven disruption are fuelling “choppiness and more dispersion across sectors.”

Barclays said traditional classifications such as cyclicals versus defensives “have become obsolete,” with markets now grouping stocks by their perceived “AI immunity or vulnerability.”

The bank noted that hard-asset and old-economy sectors, including commodities, industrials, materials, healthcare, and consumer goods, are being treated as AI-immune, while many consumer or commercial services and technology-related industries “are being viewed as vulnerable.”

The list of perceived AI losers has widened sharply. Barclays believes the narrative began with media and business services, then spread into software, and “now into financial services, logistics and CRE.”

Selling pressure within this cohort “has become indiscriminate,” the bank wrote, driven more by narrative than fundamentals, even as “EPS momentum remains resilient.”

Barclays cautioned that investors are asking “who is next,” showing “no mercy for anything remotely seen as an AI loser.”

The bank added that concerns about business failures are spilling into credit markets and weighing on banks, “until now seen as AI winners.”

“In the near term, we acknowledge that momentum may be unstoppable with no clear catalyst to stop the rout,” Barclays said, though it sees long-term opportunities in the dislocation.

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