As the FTSE 100 index bobs along close to all-time highs, it is easy to miss the quiet share price crash in one corner of the market. It’s got a name – the “Claude crash”, referencing the plug-in legal products added by the AI firm Anthropic to its Claude Cowork office assistant.
This launch, or so you would think from the panicked stock market reaction in the past few weeks, marks the moment when the AI revolution rips chunks out of some of the UK’s biggest public companies – those in the dull but successful “data” game, including Relx, the London Stock Exchange Group, Experian, Sage and Informa.
Relx, the former Reed Elsevier, whose brands include the Lancet and LexisNexis, is the most intriguing in that list. The company’s description of itself contains at least five words to provoke a yawn – “a global provider of information-based analytics and decision tools for professional and business customers” – but the pre-Claude share price was a thing of wonder. It was £5 in 2012 and £41 in May last year, at which point Relx was worth £70bn-ish and was the fifth-largest company in the FTSE 100 index.
And now? The shares have halved from their highs and the biggest falls have come since Claude’s supposedly terror-inducing plug-ins appeared. The market has flipped from seeing Relx as an AI winner – because it is using AI to boost existing products – to fearing its beautiful 34% profit margin will implode.
What does the company itself think? Well, Thursday’s full-year results were not titled “the stock market’s gone mad”, because that’s not Relx’s style. But the numbers and statement oozed confidence: revenues up 7% to £9.6bn and operating profits up 9% to £3.3bn; a forecast of “another year of strong growth in 2026”; a dividend raised 7%; and a bigger share buyback of £2.25bn.
Chief executive Erik Engström also offered a coherent argument for why the evolution of AI would “remain a key driver of customer value and growth in our business for many years to come”.
Short version: AI tools are not new; the recent launches that have caused the fuss are “workflow” products for storing, sorting and reviewing documents for specific projects; Relx mostly fishes in the smaller market for must-have information that is comprehensive and can be relied upon in court.
Some of Relx’s data may be public, some may have been public in the past but no longer is so; some is hard to find; some is licensed; some is proprietary; it all comes with “judgments, inferences and interpretations gathered over decades” that are useful to scientists, lawyers, insurance and City professionals and risk assessors; and AI may assist in that value-adding process, or just make the stuff easier for customers to use.
His other big point is that Relx is free to do limited licensing deals with AI companies if it wishes, and can continue to launch its own “workflow” products, but it is never going to surrender its impossible-to-replicate proprietary information because that’s where the value in its business lies.
It was good for a 2% bounce in the share price, which is better than nothing, but still suggests market worries about where the AI evolution goes next, and whether Relx’s “competitive moat”, as the analysts say, is as deep as advertised. The issue, in part, is fear of the unknown.
But Relx’s tactical response should be obvious. If it thinks growth can be relied upon “for many years to come”, as Engström says, and, if the shares are available at half the price of a year ago, just keep the buybacks rolling.
This year’s £2.25bn version, up from £1.5bn, equates to 6% of the entire equity base. If it keeps up that pace for a few years, it will get a serious boost to earnings per share – assuming, of course, that the projections for the business itself really are solid.
Bigger buybacks, reportedly, are also the activist investor Elliott Management’s prescription at LSEG, where the AI worries and counter-arguments are similar. If you are truly confident, it is the right thing to do.
