The AI Sell-Off: Which stocks are being over punished?

AI stocks in Bernstein's coverage have been hit by worsening sentiment, and the firm argues the sharp sell-off across AI-related names now discounts a broader deterioration in AI infrastructure demand than the incremental evidence supports, while also applying a blanket data center discount across companies participating in very different parts of the AI opportunity. Bernstein's framework measures exposure to hyperscaler and neocloud data centers rather than total AI participation, estimated by FY1 operating profit and FY1 operating profit growth, excluding enterprise on-premises infrastructure that is less exposed to permitting, power and construction risk. Regressing forward P/E change against data center operating profit exposure yields an R-squared of roughly 0.61, rising to about 0.64 using operating profit growth, implying each additional 10 percentage points of data center OP growth exposure is associated with roughly 7.2% forward P/E compression versus the three-year average. V