European AI Adopter Stocks Slide as Powerful New Models Spark Investor Caution

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Shares of European companies investing heavily in artificial intelligence have faced a sharp selloff this week, as the emergence of more advanced AI models raises concerns about potential disruption across software, data analytics, and financial services sectors.

European software stocks, including Germany’s SAP (SAPG.DE) and France’s Dassault Systèmes (DAST.PA), fell sharply on Tuesday following a downgrade of U.S. rival Adobe (ADBE.O) by broker Melius Research. Since mid-July, shares in London Stock Exchange Group (LSEG.L), UK software firm Sage (SGE.L), and French IT consulting company Capgemini (CAPP.PA) have dropped 14.4%, 10.8%, and 12.3%, respectively.

These companies—often labeled AI adopters—have invested heavily in AI to enhance products and services, attracting investor interest amid a shortage of European AI suppliers. However, the release of more powerful AI models, such as OpenAI’s GPT-5 and Anthropic’s Claude for Financial Services, has prompted a reassessment of their long-term competitiveness. Kunal Kothari of Aviva Investors noted that each new AI iteration challenges the business models of data providers like LSEG.

While the broader European markets have posted modest gains—FTSE 100 up 2.5% and STOXX 600 up 0.6% since mid-July—high valuations have made AI adopter stocks particularly vulnerable. SAP trades at around 45 times earnings, compared with a STOXX 600 average of 17.

Investors are debating whether AI will “eat software,” as Nvidia CEO Jensen Huang famously predicted. Analysts caution that not all software companies are equally exposed. Firms with deeply embedded enterprise applications or proprietary data may retain a competitive edge. For example, UK credit data company Experian (EXPN.L) and Sage benefit from extensive integration into client workflows, making them less vulnerable to disruption.

Some experts view the selloff as a buying opportunity, noting that affected companies could leverage AI to boost earnings over time. However, market watchers warn that proving tangible returns from AI investments may be a race against the clock for major European software players.

JD.com Struggles to Gain Ground in China’s Instant-Delivery Market

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Chinese e-commerce giant JD.com (9618.HK) is ramping up efforts to expand its instant-delivery business through JD Takeaway, launched in February, aiming to diversify revenue beyond its core retail operations. Despite significant investments and improvements in user engagement—quarterly active customer growth and shopping frequency rose over 40%—the company faces a steep challenge breaking into a market dominated by established players.

Daily active users of JD’s delivery service have declined steadily since mid-June, falling more than 13% week-on-week by July 27, according to M Science data, signaling potential market share loss. Analyst Vinci Zhang noted that Meituan (3690.HK) and Alibaba’s (9988.HK) Ele.me service possess strong expertise in food delivery, making JD’s expansion particularly difficult.

JD’s investments in food delivery have also compressed profitability, with the adjusted operating margin dropping to 0.3% in the June quarter from 4% a year ago. By comparison, Meituan recently recorded an all-time high of 120 million daily orders across food and retail, controlling nearly 70% of the delivery market, while Alibaba’s Taobao instant commerce combined with Ele.me hit 80 million daily orders, with 200 million daily active users early in July.

The market is seeing fierce competition, with the three companies collectively pledging nearly 200 billion yuan ($27.87 billion) in subsidies, fueling a price war in instant retail that has drawn regulatory attention. JD.com CEO Sandy Xu emphasized the company’s focus on platform improvements to attract more users, merchants, and delivery riders, even as competitors prepare to report their quarterly results.

China Slams U.S. as “Surveillance Empire” Over Chip Shipment Trackers

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China’s state-run media Xinhua criticized the United States on Friday for secretly placing location trackers in shipments of advanced chips at risk of diversion to China, calling the practice indicative of the “instincts of a surveillance empire.” Reuters had reported earlier that U.S. authorities embedded these devices to monitor shipments subject to export restrictions aimed at curbing China’s access to advanced semiconductor technology.

In a commentary titled “America turns chip trade into a surveillance game,” Xinhua accused Washington of running “the world’s most sprawling intelligence apparatus” and treating trade partners as rivals to be undermined. The piece warned that if U.S. chips are perceived as potential surveillance tools, global customers may seek alternatives.

The commentary reflects ongoing tensions between the two tech superpowers. The U.S. government has imposed strict limits on exports of advanced chips and related equipment to China, while Washington and its allies have previously accused China of embedding potential surveillance capabilities in exported products, ranging from telecom gear to vehicles.

In recent moves, China has asked U.S. chipmaker Nvidia to clarify whether its H20 chips contain hidden backdoors and has cautioned domestic tech companies about their use, amid heightened scrutiny of foreign technology for security risks.