AI revolutionizes markets once again, focusing on “losing” sectors

Artificial intelligence, and more specifically, the market valuation of companies in the sector, have been back in the headlines in recent days, although this time they have caused a shift in the debate.

Initially, doubts focused on the profit-generating capacity of the companies that were investing most heavily in it. Then, it was the valuations achieved by some companies that caught the market's attention, and now, the debate seems to have evolved from “who will be the winners of AI” to “which business models will be most affected by the emergence of this technology.”

“This situation is causing a wave of declines in the market in non-technology sectors,” says Ismael García Puente, deputy director of Investment Strategy at Mapfre AM. “This is causing the indices to remain close to their highs, but with a lot of dispersion and volatility if we analyze the composition.”

The deputy director of Investment Strategy at Mapfre AM argues that there is no bubble in the market. The rises that have been recorded are in line with fundamentals: the profits of AI-related companies remain good, and it is guidance that is driving the market at the moment.

This business evolution has not gone unnoticed: García Puente points out that it is rare to find an investor who does not have exposure to the sector. For example, Fondmapfre Bolsa América, Mapfre AM's fund that invests in US equities, has exposure to technology stocks in line with its benchmark.

Likewise, as Mapfre AM explains in its latest monthly report, artificial intelligence is one of the reasons behind the strong performance of the US economy, thanks to the productivity gains that have been recorded and which “translate into higher economic growth and a faster pace of disinflation.”