16/08/2025

BIZ & FINANCE SATURDAY | AUG 16, 2025

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New AI models hit European tech stocks

LONDON: A rout in shares of European companies embracing artificial intelligence (AI) deepened this week, as powerful new AI models raise questions about whether sectors from software to data analytics could find themselves overtaken by the technology. European software stocks, including Germany’s SAP and France’s Dassault Systemes, tumbled on Tuesday as worries that AI will disrupt the software sector spread through the market. That followed a downgrade to US rival Adobe on Monday by broker Melius Research. Since mid-July, shares in markets and data group LSEG, UK software firm Sage, and French IT consulting group Capgemini have dropped 14.4%, 10.8% and 12.3% respectively. Such companies – dubbed AI adopters by analysts – are investing heavily in the technology to beef up their products and services. Amid a dearth of European AI companies and suppliers, their shares had benefitted as investors in the region sought a way to tap the AI boom powering US markets. But the release of ever more powerful AI tools appears to have prompted a rethink among some market players. Last week, OpenAI launched its GPT-5 model, the latest iteration of the AI technology that has helped transform global business and MONTREAL: Air Canada and its unionized flight attendants remained at odds yesterday, despite government pleas for both sides to return to bargaining to avert a strike that would upend travel for tens of thousands of passengers. Canada’s largest carrier has said it expects to cancel 500 flights by the end of the day, ahead of the planned strike today, leaving some 100,000 passengers scrambling for alternatives. Flightradar data showed Air Canada had cancelled 27 flights as of 10pm EDT on Thursday (0200 GMT yesterday). The carrier’s 10,000 flight attendants are gearing up to strike just before 1am EDT today over stalled contract talks on union demands for higher wages and compensation for unpaid work.

o Smart tech surge sparks fears of disruption, hitting software and data firms

average price-to-earnings multiple of 17 times, while SAP – whose shares are down 7.2% since mid-July after posting their biggest daily drop since late 2020 on Tuesday – trades at around 45 times. Although many AI adopter stocks are struggling, some investors say markets will eventually take a more systematic approach, picking out potential winners and losers. “At the moment, it feels like the market’s just shooting first and putting them all in a ‘challenged basket’” said Aviva’s Kothari, referring to the decline in UK AI adopters. The hype around new AI models has led to the resurfacing of 2017 comments from Jensen Huang, the CEO of AI chipmaking behemoth Nvidia, that “AI is going to eat software”. “We don’t disagree, but we believe some delineation is warranted here, as not all software companies are equally exposed,” said Steve Wreford, portfolio manager on the global thematic equity team at Lazard Asset Management. He said those with software deeply embedded into client company workflows, or with hard-to-replicate Hajdu has repeatedly urged both parties to negotiate. Air Canada’s chief human resources officer Arielle Meloul-Wechsler said on Thursday the carrier was “available to bargain at any time on the condition that the negotiation has substance.” On Thursday night, Air Canada and the union clashed over an agreement to avoid stranding thousands of passengers abroad when the strike is expected to begin today. The deal would have delayed the walkout for cabin crew who were away from their home base, until they returned with their passengers today. Air Canada said on X that an additional 25,000 passengers would be stranded after the union rejected that deal, adding that double the usual number of flight attendants did not report for work on Thursday night. But in a bulletin to members, the union said it supports the deal, which failed because Air Canada said it would not honour its members’ collective agreements when they fly back today with their passengers. The flight attendants’ contract ceases to apply when the strike begins today, the union said. The dispute hinges on the way airlines compensate flight attendants. Most have traditionally paid them only when planes are in motion. But in their latest contract negotiations, flight attendants in North America have sought compensation for hours worked, including for tasks such as boarding passengers and waiting around the airport before and between flights. – Reuters

culture since ChatGPT arrived in late 2022. Kunal Kothari, a fund manager at Aviva Investors, also pointed to the July 15 release of Anthropic’s Claude for Financial Services. “The app that came out has now challenged an investment case around London Stock Exchange (LSEG), around the provision of financial data,” he said. “We’re at the stage now with every iteration of GPT or Claude that comes out ... it’s multiples more capable than the previous generation. The market’s thinking: ‘oh, wait, that challenges this business model.’” The drop in European adopter stocks contrasts with broader market gains. Since mid-July, London’s FTSE 100 is up 2.5% and Europe’s STOXX 600 up 0.6%, while US indexes have scaled record highs, largely powered by tech stocks. Exacerbating matters is the fact that many European adopter stocks trade on high multiples, making them vulnerable to any potential negative news, according to Bernie Ahkong, chief investment officer at hedge fund UBS O’Connor. The STOXX 600 trades at an A strike would hit Canada’s tourism sector during the height of the summer travel season and test the ruling Liberal government under Prime Minister Mark Carney, which has been asked by the carrier to intervene and impose arbitration. Air Canada and its low-cost affiliate Air Canada Rouge normally carry about 130,000 customers a day. Air Canada is also the non-US carrier with the largest number of flights to the US, despite recent cutbacks in travel there from Canada due to trade tensions. Air Canada, which has also given notice that it will lock out its flight attendants, has ceased negotiating, said the Canadian Union of Public Employees, which represents the cabin crew. Canadian Jobs Minister Patty

Europe’s software giants grapple with doubts over their place in an AI-driven future. – UNSPLASH PIX

merger of 12 smaller cybersecurity firms backed by BGH Capital. The company now employs about 1,400 people and runs security operations centres across Australia and New Zealand, with offices in London and New York. CyberCX is led by John Paitaridis, formerly managing director of Optus Business, and Chief Strategy Officer Alastair MacGibbon, Australia’s former national cybersecurity coordinator. The leadership’s ties to Optus are notable, given the telecommunications company’s 2022 data breach, which exposed names, birth dates, addresses, phone numbers, email contacts and passport and driver’s license numbers. Since 2015, Accenture has completed 20 security acquisitions, including recent purchases of Brazilian cyber defense firm Morphus, MNEMO Mexico and Spain-based Innotec Security. On the domestic front, the firm entered into a US$700 million (RM2.9 billion) collaborative agreement with Telstra in February, aiming to implement AI capabilities across the telecommunications company. – Reuters Britain’s Sage. He holds both stocks, along with LSEG, but cautioned that proprietary data alone may no longer be enough to protect businesses. “I just don’t think data is a big enough moat anymore,” he said. The selloff in AI adopter stocks could be an opportunity for investors to pick the winners, said UBS O’Connor’s Ahkong. “Some of the affected names will actually be able to use AI as an opportunity and tailwind for earnings, but need to prove that from here and that will take time,” Ahkong said. But how much time the companies have is unclear. Some investors were already warning earlier this year that the clock was ticking for big spenders on AI to show returns. – Reuters

proprietary data, still had strong competitive advantages. Paddy Flood, portfolio manager and global sector specialist, technology at Schroders, said it was important to distinguish between different types of software. “Enterprise-grade applications are less exposed, given their mission critical nature, the complexity involved in replacing them, and the value of a trusted vendor ensuring ongoing service,” he said. Aviva’s Kothari also flagged the benefits of having software deeply embedded with customers, citing UK credit data firm Experian as an example. “It has lots of data unique to it, but it’s also hugely embedded in the workflows of financial institutions. They want to make a loan, they need Experian,” he said, also highlighting

Air Canada, union clash despite pleas to avert strike

Accenture to buy Australia’s CyberCX for A$1 billion

BENGALURU: Accenture said on Thursday it will buy Australian cybersecurity firm CyberCX in its largest-ever deal in the sector, with the Australian Financial Review valuing the transaction at more than A$1 billion (RM2.7 billion). A wave of devastating cyberattacks has battered Australia, including a 2022 breach at telecom major Optus that exposed the personal data of up to 10 million users, and a hack on health insurer Medibank affecting nearly 10 million customers. In July, Qantas Airways disclosed that criminals had infiltrated one of its call centres, accessing personal information of six million customers. Private equity firm BGH Capital, which is selling CyberCX, has not disclosed any financial terms. Accenture declined to provide additional details, while BGH Capital didn’t respond to Reuters’ requests for comment on the reported valuation. The deal underscores the surging demand for advanced digital security services as businesses worldwide face increasingly sophisticated cyber threats that disrupt operations and compromise sensitive data. Melbourne-based CyberCX was formed in 2019 through the

Walkout over wages and unpaid work could ground 500 flights, disrupt travel for 100,000 passengers at peak summer season. – UNSPLASH PIX