European companies under pressure to demonstrate profitability of generative AI
European companies investing heavily in generative artificial intelligence are under increasing pressure to demonstrate by next year that the investments do pay off. The recent downturn in AI-related stocks, compounded by fears of a recession and the emergence of cheap Chinese AI models such as DeepSeek, has led investors to become more critical.
While optimism about AI’s potential to increase productivity and profits persists, there is a shift toward companies actively adopting AI technology rather than those supplying hardware to the industry. However, this preference depends on companies proving the value of their investments. If they fail to do so, investor interest may wane.
Attention has shifted from AI enablers such as chipmaker Nvidia, whose shares show volatility despite impressive year-over-year gains, to companies that benefit directly from the implementation of AI. European hardware makers, such as ASM International and BE Semiconductor, have experienced significant declines since the launch of DeepSeek. In contrast, AI adopters such as LSEG and RELX have shown more resilience, with SAP even surpassing Novo Nordisk to become Europe’s most valuable company.
This shift reflects a growing realization that the real beneficiaries of AI are not only those who provide the underlying technology, but also those who successfully integrate it into their operations to achieve tangible results. Investors’ patience is running out, and they expect to see a clear return on their investment within a relatively short time frame.
Despite the high valuations for AI stocks, analysts warn that investor confidence depends on demonstrable progress. Beta tests and trials may be acceptable in 2025, but concrete impact on revenue in 2026 is crucial. The emergence of viable ‘killer’ use cases, applications with proven market demand and profitability, will be key to justifying ongoing investment in AI.
Ultimately, the success of AI adoption will depend not only on technological advances, but also on companies’ ability to turn those advances into real value. The coming year will likely be crucial in determining which companies can successfully navigate this transition and solidify their position as true AI leaders.
Business AM
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