Traders Are Fleeing Stocks in Fear of Being Threatened by Artificial Intelligence

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Artificial intelligence is leaving an undeniable mark on U.S. financial markets. Nvidia Corp., now valued at nearly $4.5 trillion, holds the crown as the world’s most valuable company, while AI pioneers like OpenAI and Anthropic have secured tens of billions in funding.

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Yet, investors are increasingly aware of AI’s potential downside the capacity to shake up industries as dramatically as the internet once did. Market players are now placing bets on which sectors could be disrupted next, shifting away from companies projected to see weakening demand as AI adoption accelerates.

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Among the most exposed are web-development platform Wix.com Ltd., digital-image marketplace Shutterstock Inc., and creative-software giant Adobe Inc. These three are part of a list of 26 firms Bank of America strategists flagged as being most at risk from AI’s rise. After keeping pace with the S&P 500 from ChatGPT’s late-2022 debut until mid-May 2025, this group has since lagged by roughly 22 percentage points.

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“The disruption is real,” said Daniel Newman, CEO of the Futurum Group. “We thought the timeline would be five years. It looks more like two. Service-based firms with large workforces, even those with strong legacy businesses, face significant vulnerability.”

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So far, few companies have gone under due to the spread of AI tools chatbots and “agents” capable of coding, answering complex queries, and creating images or videos. Still, with tech giants such as Microsoft Corp. and Meta Platforms Inc. committing hundreds of billions to AI, many investors are taking a more defensive stance.

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The numbers speak for themselves: Wix.com and Shutterstock have each plunged more than 33% in 2025, versus an 8.6% gain for the S&P 500. Adobe has dropped 23% as clients increasingly explore AI platforms for content creation Coca-Cola, for instance, produced an ad entirely with AI. Staffing-service provider ManpowerGroup Inc. is down 30%, and rival Robert Half Inc. has shed over 50%, marking its weakest level in more than five years.

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AI’s sweeping changes extend beyond business to how people search for information online or how universities operate. Even AI leaders like Microsoft have been trimming headcount to boost efficiency and free up resources for more AI investment. Many tech watchers believe we’re nearing a tipping point where AI’s ubiquity forces some companies out of existence.

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Investor unease was evident last week when Gartner Inc. shares tumbled 30% over five days its largest weekly drop ever after cutting its revenue outlook. While the company cited U.S. policy issues such as tariffs and spending cuts, analysts pointed to AI as a looming threat, offering cheaper alternatives to Gartner’s research despite its own AI initiatives.

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Morgan Stanley said the results “added fuel to the AI disruption case,” while Baird warned it was “incrementally concerned AI risks are having an impact.” Gartner declined to comment.

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History offers plenty of reminders of technology’s power to upend entire industries: telegraph to telephone, horse-drawn buggies to cars, and Blockbuster’s demise at the hands of Netflix.

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“There are pockets of the market that could be completely wiped out by AI, or at least face massive upheaval,” said Adam Sarhan, CEO of 50 Park Investments. “If you pay someone to do something AI can do faster and cheaper graphic design, admin work, data analysis their job is at risk.”

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Still, some companies have thrived despite AI’s potential to compete with them. Duolingo Inc., whose language-learning app could theoretically be replaced by AI translation tools, has nearly doubled its stock price over the past year after boosting its 2025 sales forecast, thanks in part to weaving AI into its own business model. Nonetheless, investors remain cautious that future AI advances could still pose a threat.

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This renewed defensiveness underscores AI’s role as a major dividing line between stock market winners and losers in 2025. Earlier in the year, doubts emerged over U.S. leadership in AI as China’s low-cost models gained ground, sparking fears of reduced spending on high-end computing gear. Instead, U.S. tech leaders have doubled down.

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Microsoft, Meta, Alphabet Inc., and Amazon.com Inc. are on track to invest about $350 billion in combined capital expenditures this fiscal year nearly 50% more than last year largely aimed at building AI infrastructure. That spending continues to drive demand for Nvidia’s market-dominant AI chips.

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Pinpointing which companies are most vulnerable requires nuance. Alphabet, for example, boasts world-class AI talent and data but still appears in Bank of America’s AI risk basket, as it works to defend its massive internet search dominance. For others, the threat is more straightforward.

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Omnicom Group Inc., an advertising giant, has slid 15% in 2025 amid reports that Meta plans to automate ad creation entirely via AI. WPP Plc, another major ad firm, has plunged over 50%. “The traditional ad agency model is under serious strain and that’s before generative AI scales fully,” noted Michael Nathanson, senior analyst at MoffettNathanson.

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According to Phil Fersht, CEO of HFS Research, the AI disruption theme is only going to intensify. “Wall Street clearly has the jitters,” he said. “This is going to be a tough, unforgiving market.”

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