European stocks retreated on Friday, as concerns about potential disruption from artificial intelligence kept investors cautious, while they also weighed mixed earnings results from Safran and L’Oréal.
The pan-European STOXX 600 index was steady at 618.54 points as of 09:39 GMT, after earlier falling as much as 0.3%, and is on track to finish the week little changed, according to Reuters.
Global markets have experienced volatility since late January with the launch of new artificial intelligence tools, as investors attempt to assess the impact of these models on established companies, while major technology firms move to increase spending on development of the technology. Disappointing margins from Cisco Systems added to concerns, while European logistics, insurance, index operators, software companies, and asset managers faced heavy selling. Italy’s main index, which includes large financial firms, was on course for its biggest three-day drop since early January, falling 1.3%.
Despite a 1.4% rise in technology stocks on Friday, the sector remained among the worst performers for the week. “The story here is about over-investment in AI, valuations, and the disruption these technologies are causing,” said Kyle Rodda, senior financial market analyst at Capital.com. He added that companies are spending vast sums and borrowing to stay ahead in the AI development race, reducing potential returns on capital as revolutionary new models raise questions about who will benefit from the boom.
On the earnings front, European corporate profits are now expected to fall 1.1% year-on-year this quarter, an improvement from a previously expected 4% decline, according to data compiled by the London Stock Exchange Group, though this would be the worst earnings performance in the last seven quarters, impacted by high U.S. Tariffs.
The defense sector led gains on Friday, rising 2.7%, supported by aerospace and defense group Safran, whose shares jumped 7.4% after forecasting higher revenue and profits for 2026. Capgemini also rose 3.5% after announcing annual revenue that exceeded expectations.
In contrast, L’Oréal shares fell 3.4% after fourth-quarter sales came in below expectations, dragging down the personal and household goods sector by 0.5%. Delivery Hero also dropped 6.3% after posting mixed results for its Middle East unit, according to a European trader.
European stocks experienced a mixed session on February 13, 2026, as investor sentiment remained sensitive to the evolving landscape of artificial intelligence. The pan-European STOXX 600 index ultimately settled at 618.54 points by 09:39 GMT, after briefly dipping as much as 0.3%, and is poised for a largely flat weekly performance. The market’s hesitancy stems from ongoing assessments of how new AI technologies will impact established businesses, particularly as major tech companies ramp up investment in the field. Concerns were amplified by recent earnings reports, with Cisco Systems’ disappointing margins adding to the uncertainty. Sectors including logistics, insurance, and software have been particularly affected by selling pressure. Italy’s main index is facing its largest three-day decline since early January, down 1.3%, largely driven by weakness in its financial sector. Despite a 1.4% gain in technology stocks on Friday, the sector remains a laggard for the week. Kyle Rodda, senior financial market analyst at Capital.com, characterized the situation as driven by “over-investment in AI, valuations, and the disruption these technologies are causing.” He noted that companies are increasingly reliant on borrowing to maintain a competitive edge in AI development, potentially diminishing returns on investment. Corporate earnings data offered a mixed picture. European companies are now projected to see a 1.1% year-over-year decline in profits for the current quarter, an improvement from a previous forecast of a 4% drop, according to data from the London Stock Exchange Group. However, this would still represent the weakest earnings performance in seven quarters, impacted by high U.S. Tariffs. Within the STOXX 600, the defense sector provided a bright spot, rising 2.7% on strong results from Safran, which saw its shares jump 7.4% following optimistic revenue and profit forecasts for 2026. Capgemini also contributed to the gains, rising 3.5% after reporting annual revenue exceeding expectations. Conversely, L’Oréal shares fell 3.4% after fourth-quarter sales fell short of analyst estimates, pulling down the personal and household goods sector. Delivery Hero also experienced a decline, dropping 6.3% following mixed results from its Middle East operations. The varied performance underscores the challenges companies face in navigating a rapidly changing economic environment.
