UBS Research: The Most Urgent Area of AI Disruption Risk

Investing.com - UBS states that AI has become a “decisive factor in the relative performance of European stocks.” Over the past three years, AI-enabled companies have risen by 85%, adopters by 40%, while stocks considered vulnerable to disruption have fallen by 50%, highlighting the growing gap between beneficiaries and risk bearers.

Learn more about how AI is disrupting various industries with InvestingPro.

The bank uses AI-driven scores to assess opportunities and risks. “AI risk scores measure how vulnerable each company is to AI-driven substitution, profit pressure, or regulatory friction,” it notes in a report, highlighting business models where AI is a “direct threat to economic engines.”

High-risk companies often exhibit features such as pricing pressure, easily automatable workflows, or weak intellectual property protections.

UBS states that the most direct disruption risks exist among labor or seat-based service providers. Companies like Capgemini, Adecco, and Teleperformance heavily rely on sales personnel’s time.

AI can automate coding, support, and matching tasks, which may “drive down prices and reduce the amount of manual work customers are willing to pay for,” unless these companies shift toward AI-driven or outcome-based services.

UBS points out that the MSCI Europe Software & Services Index underperformed by 17% over the past month as investors reacted to rapid advances in AI coding and automation.

Gatekeeper platforms are also under increasing pressure. AI tools that aggregate information across websites reduce the demand for paid listings or increased visibility on platforms like Rightmove and Auto Trader unless these platforms can demonstrate they provide higher-quality leads or proprietary data that cannot be replicated.

Another concerning area is advertising and content businesses. UBS notes that AI “significantly reduces the cost of producing advertising and creative content,” potentially prompting clients to shift work internally or rely on automation tools, thereby putting pressure on traditional advertising production and conventional TV formats.

Furthermore, if AI-generated content competes with proprietary materials and erodes the value of existing rights, intellectual property holders like Ubisoft and Pearson face risks.

More broadly, UBS highlights a clear divergence within the IT sector: “structural winners versus companies at risk of disruption.” It contrasts labor-intensive or seat-based providers with deeply embedded enterprise platforms like SAP, which are at the core of corporate architecture. As AI accelerates migration, cloud business is growing by 30%, and costs are expected to be reduced by €2 billion in the future.

Therefore, UBS believes stock selection is crucial to “distinguish truly disrupted companies from early AI adopters providing irreplaceable enterprise services.”

The bank also notes that investors have been actively buying AI enablers and selling companies perceived to be at risk, “sometimes too indiscriminately,” suggesting that the next phase of AI trading may shift toward adopters demonstrating measurable profit improvements rather than pure infrastructure players.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.