Investors are discovering that the artificial intelligence landscape is \u200cnot just fertile ground for stocks — it is also a minefield.<\/p>\n
Enthusiasm about AI\u2019s profitability has fueled the U.S. bull market, with stock gains for technology companies and others tied to the build-out of data centers and related infrastructure. Many investors have also pointed to 2026 as the year AI will start boosting bottom \u2060lines more \u200bbroadly, as companies see productivity benefits.<\/p>\n
But recent concerns over the technology\u2019s disruptive potential are rattling industries, including software, legal services and wealth management, as investors rethink how to value those businesses.<\/p>\n
Questions over massive AI capital spending are pressuring the share prices of some of the world\u2019s biggest companies, including Amazon.com and Microsoft.<\/p>\n
\u201cYou\u2019ve clearly seen that breakdown in terms of the monolithic AI trade,\u201d said Garrett Melson, portfolio strategist at Natixis Investment Managers \u200bSolutions. \u201cYou\u2019re going to have these tug-of-war dynamics in a lot of the bigger index weights, just \u200cby how the market\u2019s rewarding perceived winners and losers in the AI race.\u201d <\/p>\n
Already in 2026, Anthropic\u2019s launch of plug-ins for its Claude Cowork agent triggered selling of software stocks. The heavyweight S&P 500 software and services index was down 15 per cent since the end of January, as of Wednesday. <\/p>\n
Shares of U.S. brokerages tumbled on Tuesday after wealth management startup Altruist introduced AI-enabled tax planning features, with LPL Financial, Raymond James Financial and Charles Schwab each dropping at least 7 per cent. <\/p>\n
Shares of U.S. insurance \u200cbrokers such as \u200bWillis Towers Watson and Arthur J Gallagher also \u200cslumped this week, after online insurance platform Insurify released an AI-powered comparison tool built on ChatGPT.<\/p>\n
\u201cYou\u2019re going to see a lot of volatility driven \u200bby these headline stories that are also going to be very single-name centric,\u201d said \u2060Alex Morris, CEO and CIO of F\/m Investments.<\/p>\n
Some of the signature stocks of this bull \u2060market have also struggled this year, undercut by concerns they would fail to reap sufficient returns from high capital spending. <\/p>\n
Shares of Microsoft, which has been caught up in the \u200bconcerns about the software space, are down 16 per cent this year, while Amazon.com shares are down over 11 per cent.<\/p>\n
\u201cThe concern that they\u2019re just spending far too much money … I think that\u2019s an open question,\u201d said Yung-Yu Ma, chief investment strategist at PNC Financial Services Group, adding that he thinks \u201csome of the negativity around the spending is going to ease up.\u201d<\/p>\n
Some investors sense a buying opportunity as valuations become more enticing. For example, the forward price-to-earnings ratio for the software and services index recently fell to \u206022.7 times, its lowest level in nearly three years, according to LSEG Datastream. <\/p>\n
JPMorgan equity strategists on Tuesday recommended investors add exposure to a basket of higher-quality and \u201cAI-resilient\u201d software companies, saying in a note that they believe \u201cthe balance of risks is increasingly skewed towards a rebound.\u201d<\/p>\n
\u201cThe challenge right now is that AI is moving quickly,\u201d said Keith Lerner, chief investment officer at Truist Advisory Services. \u201cEarnings are still strong, but it\u2019s hard for companies to come out and disprove the narrative.\u201d<\/p>\n
In assessing the fallout from AI developments, Sean Dunlop, director of equity research at Morningstar, said economic \u201cmoats\u201d – a term \u2060used to describe a company\u2019s competitive advantages – can help investors \u201csift through the wheat and \u200bthe chaff to some extent, whereas selling has been pretty indiscriminate, creating investable opportunities.\u201d<\/p>\n
The AI trade lifted a wide swath of technology and \u2060related stocks for much of 2025, when the benchmark S&P 500 posted a double-digit percentage return for a third straight year.<\/p>\n
Bullish investors entered 2026 heartened by an upbeat backdrop that includes S&P 500 \u200cearnings estimated to rise over 14 per cent this year and the Federal Reserve expected to further ease interest rates. The S&P 500 was last up over 1 per cent \u200bthis year and not far from record highs, as other areas of the market have picked up the slack for the lagging tech sector.<\/p>\n
But AI-driven volatility adds a wrinkle. S&P 500 constituents that were lower on the year as of Tuesday were down an average of 10.6 per cent, according to Michael O\u2019Rourke, chief market strategist at JonesTrading. That decline compares to the average 5.9 per cent fall for index members \u200bthat were lower at this point last year.<\/p>\n
\u201cIn 2026, less is more, and stock picking is about avoiding implosions,\u201d O\u2019Rourke said in a note.<\/p>\n","protected":false},"excerpt":{"rendered":"Investors are discovering that the artificial intelligence landscape is \u200cnot just fertile ground for stocks — it is…\n","protected":false},"author":2,"featured_media":472192,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,901,276,277,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":{"0":"post-472191","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-alberta","10":"tag-artificial-intelligence","11":"tag-artificialintelligence","12":"tag-arts-news","13":"tag-bc","14":"tag-breaking-news","15":"tag-breaking-news-video","16":"tag-british-columbia","17":"tag-ca","18":"tag-canada","19":"tag-canada-news","20":"tag-canada-sports","21":"tag-canada-sports-news","22":"tag-canada-trafficcanada-weather","23":"tag-canadian-breaking-news","24":"tag-canadian-news","25":"tag-economy","26":"tag-education","27":"tag-environment","28":"tag-federal-government","29":"tag-foreign-news","30":"tag-globe-and-mail","31":"tag-globe-and-mail-breaking-news","32":"tag-globe-and-mail-canada-news","33":"tag-government","34":"tag-life-news","35":"tag-lifestyle","36":"tag-local-news","37":"tag-manitoba","38":"tag-national-news","39":"tag-new-brunswick","40":"tag-newfoundland-and-labrador","41":"tag-northwest-territories","42":"tag-nova-scotia","43":"tag-nunavut","44":"tag-ontario","45":"tag-pei","46":"tag-photos","47":"tag-political-news","48":"tag-political-opinion","49":"tag-politics","50":"tag-politics-news","51":"tag-quebec","52":"tag-sports-news","53":"tag-technology","54":"tag-travel","55":"tag-trudeau","56":"tag-us-news","57":"tag-world-news","58":"tag-yukon"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/472191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=472191"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/472191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/472192"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=472191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=472191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=472191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}