Traders Flee Stocks Feared to Be Under AI Threat

The imprint of artificial intelligence (AI) on US financial markets is unmistakable.

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NEW YORK — Nvidia is the most valuable company in the world at nearly US$4.5 trillion (S$5.8 trillion). Start-ups from OpenAI to Anthropic have raised tens of billions of dollars.

But there is a downside to the new technology: It threatens to upend industries much like the internet did. And investors have started placing bets on where that disruption will occur, ditching shares in companies some strategists expect will see fall-offs in demand as AI applications become more widely adopted.

Among them are web-development firms like Wix.com, digital-image company Shutterstock, and software maker Adobe. The trio are part of a basket of 26 companies Bank of America strategists identified as most at risk from AI. The group has underperformed the S&P 500 Index by about 22 percentage points since mid-May after more or less keeping pace with the market since ChatGPT's debut in late 2022.

"The disruption is real," said Mr. Daniel Newman, chief executive of the Futurum Group. "We thought it would happen over five years. It seems like it is going to happen over two. Service-based businesses with a high headcount, those are going to be really vulnerable."