Barclays states that the AI sell-off may continue in the short term.

Investing.com - Barclays warns that the rapid, emotion-driven sell-off targeting companies perceived as vulnerable to artificial intelligence influence may continue, with investors still in the “sell first, think later” mindset described by the bank.

Analyst Emmanuel Cau stated in a client report that the stock market has shown resilience, but concerns over the disruptive impact of AI are intensifying “market volatility and divergence across sectors.”

Barclays said that traditional classification methods such as cyclical versus defensive stocks are “outdated,” and the market now groups stocks based on their perceived “AI immunity or vulnerability.”

The bank pointed out that physical assets and traditional economic sectors, including commodities, industrials, materials, healthcare, and consumer goods, are seen as AI-resistant areas, while many consumer or business services and technology-related industries are “considered vulnerable.”

The list of companies considered AI losers has expanded sharply. Barclays believes this narrative initially started in media and business services, then spread to the software sector, and “now extends to financial services, logistics, and commercial real estate.”

The bank wrote that selling pressure within this group “has become indiscriminate,” driven more by narrative than fundamentals, even though “earnings momentum remains resilient.”

Barclays warned that investors are asking “who’s next,” showing no mercy to any company far from being seen as an AI winner.

The bank added that fears of business failures are spreading to the credit markets and putting pressure on banks, which “until now have been viewed as AI winners.”

“In the short term, we acknowledge that this momentum may be unstoppable, with no clear catalysts to halt this decline,” Barclays said, although the bank sees long-term opportunities in this misalignment.

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