Europe investors say clock is ticking for AI

They expect returns to justify valuations

- LUCY RAITANO

European companies that are spending big on generative artificial intelligence need to start showing returns on their massive outlays by next year, or risk investors losing patience after they paid sky-high prices to join the market boom.

AI-exposed stocks have been caught in a down-draft, with broader equity markets in recent weeks as recession fears rise, adding to pressure on the sector since January, when the launch of low-cost Chinese AI model DeepSeek spurred a sell-off.

While many investors are bullish about Gen-AI's potential to boost productivity and profits, some are becoming choosier, with a preference emerging for shares of companies adopting the technology, like information group RELX and software firm SAP — over those supplying chips and other hardware to the industry.

But they also say adopters need to start showing returns for the cash they've poured into the tech, or investors might cool on them too.

PENDULUM SHIFTS TO ADOPTERS

Chipmaker Nvidia is the name almost synonymous with the AI boom, even though its shares were hit hard by the rollout of DeepSeek's AI model, which requires fewer of the company's pricier chips, its stock is still 295% on year.