Market sentiment around generative artificial intelligence (GenAI) is undergoing a notable reversal, particularly within the services sector, according to new analysis from financial research firm Prometeia.
Until recently, investors had been largely bullish on GenAI, pricing in expectations of broad-based productivity gains across the economy. However, that optimism is now giving way to a more cautious — and in some cases, outright pessimistic — outlook.
A confluence of factors is driving this shift, Prometeia said. Growing concern over escalating capital expenditure (capex) associated with AI development, combined with returns that remain elusive to quantify in the near term, has raised the spectre of a bubble in what may be a significantly overvalued sector. Alongside this, fears are mounting over the disruptive potential these technologies hold for businesses operating in other sectors, especially services. Together, these pressures have fuelled heightened volatility across stock indices and triggered sell-offs in sensitive areas, most notably within the technology and software segments, it said.
In a bid to track how market expectations around GenAI’s economic impact have been evolving, Prometeia conducted an event study building on research it originally published in December 2025, which had been based on data through to April of that year. The firm extended the sample to incorporate more recent data, collecting 13 new key events tied to the development and proliferation of GenAI between May 2025 and February 2026.
Using this dataset, Prometeia examined the stock return reactions of companies listed on the S&P 500 in response to GenAI-related news, seeking to establish whether price movements were being positively or negatively influenced. The research team employed a three-factor Fama-French model and calculated cumulative abnormal returns (ACAR) over a window spanning five days before to ten days after each event, allowing them to measure any deviation from market expectations.
By comparing average impacts recorded across the full 2022–2025 period with those incorporating data through to 2026, the firm was able to assess how recent developments have altered investor perception.
The findings point clearly to a trend reversal across the technology, financial, and real estate sectors. Declining excess returns reflect rising investor unease over the trajectory of AI development. The financial sector, in particular, now shows a negative and statistically significant response to the latest GenAI-related news. Over a ten-day horizon following such events, returns are on average 0.33% below expectations — a stark contrast to the +0.32% outperformance seen for events occurring between 2022 and 2025.
Drilling down into the technology sector reveals that software and IT companies are the primary driver of this negative swing. In the ten days following GenAI-related news, returns for these firms are running on average 0.75% below expectations, compared with a positive 0.37% deviation recorded for events in the 2022–2025 window. Prometeia attributes this to the increasingly rapid pace of model improvement, which makes the prospect of competitive advantage erosion — or outright replacement — feel far more tangible. Central to this concern is the so-called “SaaSpocalypse”: the fear that GenAI could fundamentally upend the business models of companies that sell software as a service.
The financial sector impact extends across both banks and insurance companies. Investors appear to be pricing in potential spillover effects on credit conditions, while viewing fresh AI investment as a source of stress, given heightened borrowing requirements and mounting uncertainty over return on investment. Advances in AI are also stoking disintermediation fears, with the technology posing a significant challenge to data providers, including those operating in the financial space.
Prometeia’s conclusions paint a picture of a market narrative in transition. The prevailing story around GenAI has shifted from one of steady, wide-ranging benefits to a phase characterised by greater uncertainty, weighed down by high investment costs, difficult-to-measure short-term returns, and the threat of business model disruption with broader macroeconomic repercussions. The most sensitive sectors are bearing the brunt of this recalibration.
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