The era of easy profits from artificial intelligence technology is coming to an end. Analysts at BofA Global Research are warning about the "dual nature" of AI: while the market values potential earnings, the risk of obsolescence for entire sectors remains overlooked. The bank forecasts a 15% decline in the European Stoxx 600 index by the second quarter of 2026.

According to BofA, the primary risk lies in the excessive optimism of investors. Current global stock prices are factoring in annual profit growth of 17% over the next five years. However, reality may be more modest: competition will compel companies to spend billions on AI just to maintain their current market share. Such capital expenditures will inevitably impact the profitability of businesses in insurance, asset management, and traditional software sectors.

There is also a gap in performance expectations. Market valuations are based on an expected efficiency growth rate of around 3% in the US, while the CBO's official forecasts project only 0.1% for the next decade. If AI fails to deliver the promised profit surge, investors may confront a significant asset revaluation.

Shifting favorites: from chips to food

BofA has officially downgraded the semiconductor sector rating to "Underweight" (below market). Analysts believe that the deal to acquire AI infrastructure is overheated in the context of high electricity and DRAM memory costs. Rather than investing in the overpriced tech sector, the bank suggests seeking safety in more mundane assets. The new favorites are:

Food and beverages;

Telecommunications;

Chemicals.

Despite the overall pessimism, the bank maintains an "Overweight" rating for software producers. BofA experts believe that companies with unique data deeply integrated into their clients' business processes will be able to leverage AI as a defensive barrier rather than a threat to their existence.