Key facts
- LSEG shares have risen 27% since early February, recovering from a sharp selloff.
- Concerns about AI disruption impacting LSEG's data business appear to be easing among investors and analysts.
- LSEG reported strong first-quarter income growth of 9.8%, its best performance in over five years.
- The company is highlighting growth opportunities from its Model Context Protocol (MCP) server, which feeds data to AI agents.
- Activist investor Elliott Management has taken a significant stake in the company.
London Stock Exchange Group (LSEG) shares are showing signs of recovery as concerns about the disruptive impact of artificial intelligence technology on its business appear to be subsiding. The company's stock tumbled nearly 13% in February amid fears that AI models could erode its market share and pricing power in data services. However, a growing number of analysts and investors now believe the threat may be less severe than initially anticipated.
Since activist investor Elliott Management began building a significant stake in LSEG in early February, the company's share price has climbed 27%, though it remains below its 2025 peak. UBS recently removed LSEG from a list of companies it considered vulnerable to AI disruption, signaling a shift in market perception. Analysts suggest LSEG needs to demonstrate tangible revenue generation from its own AI initiatives, moving beyond mere usage to monetization.
LSEG's full-year results in February, which detailed its Model Context Protocol (MCP) server designed to feed proprietary datasets to AI agents, and its first-quarter update in April, have bolstered confidence. The company reported strong uptake for the MCP server, with over 90 customers connected and a pipeline of 60 more, contributing to a 9.8% increase in first-quarter income – its best performance in over five years. This improved communication about its role within the AI ecosystem, rather than as a competitor, has been noted by analysts.
Despite the positive momentum, some investors still perceive risks from AI. LSEG's valuation, trading at a discount to peers like Moody's and MSCI, is seen as attractive by some, particularly given its strong first-quarter performance and a high percentage of 'buy' ratings from analysts. However, the rollout of its 10-year partnership with Microsoft has reportedly disappointed some investors, and focus has shifted to how LSEG will navigate increasing AI adoption among its clients.