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Investing.com -- The global AI narrative is moving from broad enthusiasm toward a more selective focus on companies capable of turning the technology into measurable operational benefits, Citi says.
The shift comes after a period of volatility in AI-linked stocks and growing investor scrutiny around returns on large-scale capital spending.
“The global AI trade has become far more selective, with growing concerns around technological displacement (e.g., in Software) and returns on large-scale capex,” Citi strategists wrote.
However, “this recent repricing may set the stage for a renewed “AI moment” in Europe, as attention shifts to AI adoption and tangible productivity enhancements,” they added.
Strategists said Europe has been “underrepresented in the broader AI debate,” but the region may benefit disproportionately from the next phase of the cycle because productivity gains from AI adoption could be significant across a wide range of sectors.
At the macro level, however, the impact remains difficult to detect. Citi economists said Europe is still in the early stages of the AI adoption cycle, with limited evidence so far that the technology has meaningfully boosted GDP growth or labor productivity.
The current phase is mainly characterized by rising investment in infrastructure, software, data and skills rather than immediate productivity gains.
AI-related investment in the EU has already reached roughly €250 billion, or about 1.2% of GDP, though spending still lags the U.S., where investment levels are roughly twice as large relative to the economy.
From an equity perspective, strategists said the AI trade is evolving from companies that enable the technology—such as semiconductor and infrastructure suppliers—toward those that adopt it in everyday operations.
The bank highlighted industrials, health care, information technology, communications services and financials as sectors with the greatest potential to benefit from AI-driven productivity improvements.
To capture these themes, Citi introduced two baskets of European stocks exposed to AI: one focused on “enablers,” or companies providing the infrastructure behind the technology, and another focused on “adopters,” firms expected to benefit from operational improvements driven by AI.
“This “handoff ” from “enablers” to “adopters” will be particularly important for markets with smaller direct exposures to the Tech sector, such as Europe,” strategists said.
Among the enablers basket are Siemens, Schneider Electric, ABB, Legrand, ASML and Deutsche Telekom, while the adopters basket includes companies such as HSBC, EssilorLuxotica, Volkswagen, BBVA, UBS, Siemens and SAP, among others.
