US Bank Stocks Drop 13% Amid AI Scare Trade

U.S. bank stocks have declined approximately 13% since August, driven by what analysts call an AI scare trade. The selloff stems from investor concerns that the widespread adoption of AI agents will reduce customer inertia, allowing depositors to switch banks more easily and making it harder for lenders to retain low-cost deposits.

Despite the downward trend, Morgan Stanley analysts suggest the market narrative is overdone. They characterize the current low valuations as an attractive entry point for investors, particularly as Wall Street prepares to report another strong quarter.