Experian and Relx fall as City unease over AI impact outweighs buyback billions
Shares in Experian hit the bottom of the FTSE 100 in morning trade, with the City underwhelmed by what the credit checking giant called a “record year” and news of a fresh $1bn capital return.
It did not look like enough to dispel fears over the potential long-term impact of artificial intelligence on the company, despite some benefits in the immediate term.
And another big-name with a similar blend of risks and rewards on London’s blue-chip index was drawn into the selling. Relx, the business information behemoth, was also mired at the bottom of the market.
While AI is helping it cut costs, boost margins and streamline performance, there are persistent concerns over the threat it may also pose to long-term revenue streams as key customers use it in-house.
Investors hoping for ‘bullish’ outlook
Adam Vettese, market analyst for eToro, called Experian’s update “more of the same”, adding: “Experian’s full year results this morning were solid but uninspiring, landing in line with recent trading updates and at the upper end of guidance.
“Investors appear to have been hoping for a sharper acceleration or more bullish 2027 outlook. Softer UK and European Middle Eastern and African credit markets continue to weigh on sentiment.
“Today’s sell off highlights how companies like Experian are to cyclical risks and cautious market mood.”
According to analysis from City broker Jeffries, strong revenue growth in Latin America was offset by a “slowing” business-to-consumer performance in North America.
It called Experian’s guidance for 2027 “characteristically conservative”, with net interest costs of $250m to $260m and tax guidance of around 26% looking like “a partial headwind”.
Experian leads blue-chip fallers
Experian’s stock was down almost 7 per cent to 2557p, the biggest single faller on London’s top-tier index.
Matt Dorset, equity research analyst at Quilter Cheviot, looked at the technical aspects of Experian’s valuation: “Experian now trades on around 18-times [its] next-twelve-month earnings, well below its 10-year average following a derating linked to AI disruption concerns.
“While those fears are unlikely to disappear quickly, we expect management to push back on some of that narrative.”
In Wednesday’s update, Experian said: “AI is becoming a core driver of how we operate and grow. We are embedding it across products, platforms and workflows to improve performance.
“It is already driving measurable efficiency gains, with a circa 10-15 per cent uplift in coding productivity in FY26, and select areas achieving gains of over 30 per cent.
“We have already identified over $15bn of AI-enabled addressable market opportunities.”
Relx could lose out to AI
Nonetheless, with long-term AI concerns emerging as City talking points alongside Experian’s results, the selling spread.
Relx, the business information giant which runs the Lexis Nexis database, was the second biggest decliner, down 3.5 per cent at 2438p.
It also recently launched a major capital return around set-piece earnings news, earmarking £2.25bn to go back to shareholders in February, up from £1.5bn previously.
It too has been seen as both a beneficiary and potential victim of AI. The tech is seen as a potential alternative provider of the business and scientific data it provides, even if in the meantime it can help reduce costs.
At its annual results in February, Erik Engstrom, Relx chief executive, said: “The continued evolution of artificial intelligence is enabling us to add more value to our customers, as we embed additional functionality in our products, and to develop and launch products at a faster pace, while continuing to manage cost growth below revenue growth.”
But earlier this month, Relx’s stock took a hit when broker Morgan Stanley downgraded its rating on the shares, citing competition from start-up rivals using AI.
Analyst George Webb cut the stock to “hold” from “overweight” and set a price target of 2,970p, down from 3,320p.