For years, I had just one complaint about the RELX (LSE: REL) shares. They were too expensive. That’s no longer a problem as the FTSE 100 data specialist takes an absolute beating. So is it time to fill my boots?
RELX has plunged 50% over the last year, with most of that damage, a brutal 35%, coming in the last month. The culprit? Fears that artificial intelligence will blow up its subscription-based business model by offering customers similar services for free.
The panic followed the launch of AI-powered legal chatbot Claude by US firm Anthropic. Investors have dumped analytics and data stocks across the board. Experian, London Stock Exchange Group, Pearson, and Sage have all suffered, but none more than RELX.
FTSE 100 falling star
It’s not the first time AI has posed a threat. RELX shares briefly dipped after ChatGPT emerged to spark the first wave of AI panic. But the board argued AI was more opportunity than threat, as it embedded the tech into its products. I was tempted but detered by what I thought was a heady price-to-earnings (P/E) ratio of 27. I waited to see how AI mania played out, then kicked myself as the shares powered higher and the P/E sailed past 30. I’m not kicking myself today as the P/E slumps to around 16.
I’m always waiting for opportunities like these. I’ve populated my SIPP by targeting FTSE 100 businesses that have fallen out of favour, giving me a lower entry price and often a better yield. But a falling share price alone isn’t enough. If the business has just been shot down, it can fall a lot further. So has it?
On the face of it, no. Results remain solid. Yesterday (12 February), the board reported 9% underlying operating profit growth for 2025 and guided towards strong revenue and earnings growth in 2026. Management is also pushing back hard on the AI narrative. CEO Erik Engstrom insists AI will be “a key driver of customer value and growth in our business for many years to come”.
A totally binary stock
So what are we looking at here? A classic overreaction, with a proven, resilient business marked down on speculation? Or is AI an existential threat? We just don’t know. That makes this close to a binary bet.
RELX serves long-standing professional customers who rely on trusted, curated data and analytics. By contrast, AI has well-documented flaws. Can a chatbot really replace that overnight? Personally, I check every ‘fact’ it throws at me.
The board seems confident too, taking advantage of today’s lower price to hike its share buyback from £1.5bn to £2.25bn. Investors are warming up, with the shares bouncing more than 8% today. But I expect sentiment to be highly volatile. What if AI does become a serious threat? Or what if it doesn’t – but the market keeps worrying that it might?
A high-quality business on half price doesn’t come along often. RELX is worth well considering for those who understand and accept the risks. It’s firmly back on my radar. I’m just not sure I’m brave enough to pull the trigger.
