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AI has been a dominant theme in stock markets for the past three years, driving some companies to record valuations and causing others to suffer sell-offs as investors wake up to its ability to disrupt a variety of business models.
Some firms initially judged to be beneficiaries have then endured steep share price falls as the market changed its mind — in the case of London Stock Exchange Group and Relx, for example, deciding that AI was a threat to their proprietary data businesses. Yet both companies argue that AI enhances the value they add rather than destroying it, and that their unique content cannot be replicated.
AI “theft” has been a significant challenge for media groups, with many having little choice in the end but to agree licensing deals. And ad agencies have been devalued on concern that clients would leave in droves to automate their creatives in-house. Other AI “losers” include recruiters and listings providers such as Autotrader and Rightmove on the grounds that hiring could be hit by AI’s ability to screen CVs and that customers would bypass established portals as they use AI to search for the information they want across multiple sources.
But if a great AI shake-up is inevitable, so too are economic benefits as companies plough cash into it in search of productivity gains. The technology’s ability to deliver new ways of working that save time and money and drive efficiencies mean companies can automate more of their admin and improve their decision-making processes.
AI is helping pharmaceutical groups such as AstraZeneca to create new medicines with a higher probability of success than previously possible by enabling scientists to identify target areas, better understand diseases and improve drug design.
It’s working to enhance business consultancy Elixirr’s competitive advantage by driving growth in two ways: first, by embedding it into its own operations and second, by selling its expertise to clients to help them transform their own businesses.
BUY: Elixirr International (ELIX)
There is a growing view that AI could upend consulting by making the billable hour obsolete, writes Valeria Martinez.
But Elixirr International is proving that some companies can still make money by helping others adapt their business models to that shift.
Its revenue increased by 34 per cent to £150mn last year. The acquisition of US growth consultancy TRP Advisory helped.
Adjusted earnings before interest, tax, depreciation and amortisation soared by 42 per cent to £44mn, with margins ticking up by 1.6 percentage points to 29.6 per cent.
The board raised the dividend by 27 per cent to 22.6p a share.
The company now has its sights set on the FTSE 250 index and entered 2026 with a record amount of contracted revenue. At 14 times forward earnings, the shares trade at a discount to their five-year average.
BUY: M&C Saatchi (SAA)
M&C Saatchi shareholders have had a lot to take in lately, writes Valeria Martinez.
First came the surprise exit of chief executive Zaid Al-Qassab after less than two years in the role. Now, the media agency has reported a 75 per cent slump in pre-tax profits.
The decline is the result of external pressures. US trade tariffs prompted clients to rein in marketing budgets, while the US government shutdown in late 2025 delayed or halted public sector work.
Chair Heather Rabbatts said the group is confident of returning to growth this year, despite a “softer” UK market and the Iran conflict.
The shares are down by more than a fifth over the past year. The macro environment is tough, but an expected recovery in government work, ongoing simplification and a focus on higher-growth, higher-margin assets leave the stock undervalued.
HOLD: Associated British Foods (ABF)
George Weston, chief executive of Associated British Foods, lauded the performance of the group’s Primark stores at the half-year mark, writes Mark Robinson.
Management is to proceed with the demerger of the budget clothing chain. Existing shareholders will have a stake in both entities, with the split achieved by a dividend demerger.
However, ABF’s shares lost ground on results day after it detailed a fall in constant-currency sales and a 15 per cent drop in adjusted earnings to 70.7p a share.
Primark’s like-for-like sales growth was in negative territory due to faltering volumes in France, Germany and Spain.
FactSet consensus gives earnings per share of 157p, rising to 175p in full-year 2027. The group trades at a modest premium to net assets and at 11 times forecast earnings.
