AI trade grows more selective as markets reassess winners and losers, Deutsche Bank’s Reid says

[Artificial Intelligence CPU on Motherboard with Flying Data Cubes, AI Technology Concept]
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Global markets are entering a more unforgiving phase of the artificial intelligence trade, as investors abandon the idea that every tech stock is a winner, according to Jim Reid of Deutsche Bank.

“In our 2026 World Outlook, published back in November, we argued that AI is likely to be transformative—but that identifying the long-term winners and losers at this early stage is close to pure guesswork,” Reid said. “My concern then was that the market seemed very confident it already knew who the winners would be.”

That confidence has faded. Deutsche Bank’s data showed drawdowns from 52-week highs across a broad set of U.S. tech and tech-related stocks, as well as private equity firms with exposure to the sector. Several names are down between 40% and more than 70%, highlighting what Reid described as “a true winners and losers landscape.”

“The market has clearly shifted from the ‘every tech stock is a winner’ mindset to something far more brutal,” Reid said.

Reid said the real long-term beneficiaries of AI are likely to be companies capable of deploying tools that are “cheap, scalable, and able to deliver meaningful productivity gains,” particularly in large organizations with data-heavy, rules-based workflows. For now, however, the process of identifying those firms remains highly uncertain.

One notable outlier is the Magnificent Seven. As a group, the index is only about 1% below its peak, even though six of the seven stocks are down between 5% and 25%. The exception is Alphabet (GOOGL [https://seekingalpha.com/symbol/GOOGL]) (GOOG [https://seekingalpha.com/symbol/GOOG]), which Reid noted is “up nearly 25% over the last three months and roughly 75% over the last six.”

“That +75% translates into around $1.7 trillion in market value,” he said, adding that the gain alone has offset a significant share of losses elsewhere and helps explain why the S&P 500 remains near record highs.

Reid warned that if more of the largest tech names were to slip into the losers’ column, “that’s when it would properly spill over into macro.”

Here is the chart from Deutsche Bank:
[Tech drawdown chart]
Deutsche Bank

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