European stocks subdued as investors weigh AI volatility, mixed earnings

By Avinash P and Johann M Cherian

Feb 13 (Reuters) – European shares were subdued on Friday as concerns about potential AI‑driven disruptions kept investors cautious, while they also assessed mixed corporate earnings from Safran and L’Oreal.

The pan-European STOXX 600 ​index was flat at 618.54 points, as of 0939 GMT. The index ‌had slipped as much as 0.3% earlier in the session and was set to end the week little changed.

A wave of artificial intelligence tool releases since late January has triggered bouts of volatility in global markets, as investors tried to weigh the impact of newer models on traditional businesses, at a ‌time ​when major tech firms have forecasted higher spending to ⁠develop the technology.

Disappointing gross margins from ⁠U.S.-based Cisco Systems this week added to jitters.

So far, logistics companies, insurers, index operators, software companies and asset managers in Europe have borne the brunt of the selloff. Financials-heavy Italy’s benchmark slid 1.3% and is on track for its biggest ​three-day drop since early January.

While tech shares climbed 1.4% on Friday, the sector remained among the week’s laggards.

“The narrative here is about AI overinvestment, valuations and disruption,” said ⁠Kyle Rodda, senior financial market analyst at Capital.com.

“That ⁠is: AI companies are spending big and leveraging up to stay ​ahead in the AI arms race, reducing potential returns on capital, as new disruptive models ​hit the market and cast doubt over to whom the spoils of ‌the AI boom will go.”

There was some relief on the earnings front. European companies’ quarterly earnings are now expected to fall 1.1% on a year-on-year basis, improving from the 4% decline projected earlier, according to data compiled by LSEG.

Still, it is expected to be ⁠the worst earnings performance in the past seven quarters, as companies navigate steep U.S. tariffs.

The defence sector led gains on Friday, rising 2.7%, aided by aerospace group Safran, which jumped ⁠7.4% after forecasting increased revenue ‌and earnings for 2026.

Capgemini climbed 3.5% after the French IT ⁠services group reported full-year revenue that beat its own target.

By contrast, ​L’Oreal slipped ‌3.4% after the owner of Maybelline make-up missed fourth-quarter sales ​growth estimates. ⁠The broader personal and household goods sector fell 0.5%.

Delivery Hero slid 6.3% after the food-delivery company’s Middle East unit posted mixed results, a European trader said.

Later in the day, a key U.S. inflation report is due, which could help investors gauge the Federal Reserve’s next monetary policy move.

(Reporting by Avinash P and Johann M Cherian in Bengaluru; Editing by Rashmi ​Aich and Eileen Soreng)