What happened
UBS Group AG's EU AI Risk basket, a collection of 34 European recruitment firms, media groups, and business services providers facing potential AI upheaval, plunged 38% over the past year. This significant decline contrasts sharply with sell-side analysts' valuations. Their target prices imply the cohort trades at an average 51% discount, suggesting analysts perceive strong recovery potential in these companies despite market discarding them.
Why it matters
Investor confidence in European AI-disrupted sectors diverges significantly from analyst projections, creating market volatility. While UBS Group AG's EU AI Risk basket dropped 38% in a year, analysts forecast a 51% upside, indicating a fundamental disagreement on AI's impact on business models. This valuation gap forces investors to reconcile market sentiment with long-term growth forecasts, particularly as recent trends show investors prioritising asset-heavy stocks over those facing AI disruption.
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