European Stocks Seen Falling as AI Uncertainty Weighs

Dow Jones
08/21

1139 GMT - European stocks will underperform because of the uncertain path to artificial-intelligence monetization, Bank of America analysts write. Increased competition from both China and within the U.S. will force AI model makers to offer more competitive price, potentially dragging on sky-high profit expectations, the analysts say. The higher cost of borrowing will also weigh on companies' bottom line, they say. European stocks are priced for a continued boom in spending on AI, but a reversal in AI momentum would undermine that optimism. The analysts expect the Stoxx 600 to fall 10% to 580 by the second quarter of 2027. The index rises 0.3% Friday after falling for seven straight days.

 

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