Determining whether a stock’s cheap or not, involves an assessment of its recent financial performance as well as a lot of judgment. With this in mind, I’ve been taking a closer look at WPP‘s (LSE:WPP results. The advertising and marketing giant released its latest numbers earlier this week (26 February).
Since February 2025, its share price has fallen 65%, largely as a result of profit warnings issued in the following July and October. But does the group’s 2025 financial performance suggest the worst could be behind it? Or might there be more difficult times ahead? Let’s try and find out.
Delving deeper
The group’s results make for grim reading. Compared to 2024, operating profit was 22.6% lower and earnings per share was down 28.4%. Unsurprisingly, the group’s cash position has worsened too. Adjusted net debt increased by £425m (24.4%) over the course of the year. It’s also cut its full-year dividend by 62%.
It’s been six months since Cindy Rose joined as the group’s boss. She attributes WPP’s recent “underperformance” on “excessive organisational complexity, a lack of an integrated operating model and inconsistent strategic execution”. Note that she hasn’t blamed artificial intelligence (AI). Yet, many believe this could pose an existential threat to the industry.
Sam Altman, the founder of OpenAI, has been quoted as saying that AI will handle 95% of the work done by advertising agencies, marketers, and creative professionals. Even if his prediction proves to be wide of the mark, the consequences for WPP in the fourth industrial revolution are still likely to be significant.
Nothing to see here?
But the group views AI as more of an opportunity than a threat. Rose wants the group to become “the trusted growth partner for the world’s leading brands in the era of AI”.
How? Well, it announced Elevate28, its new strategy intended to stabilise the business in the short-term and then “build a new platform for growth and accelerate future performance”.
Part of this involves unlocking £500m of annual cost savings. This is ambitious. For context, the group’s 2025 headline profit before tax was £1.09bn. From an operational perspective, WPP intends to simplify its structure and offer “fully integrated, AI-enabled solutions through four core operating units”.
To demonstrate confidence in the business and this new approach, the chairman and chief executive each bought 50,000 shares soon after the release of the results. And despite its troubles, it must be remembered that the group still retains a huge global presence and an impressive blue-chip customer list.
My view
Personally, I have my doubts whether WPP will be one of the net beneficiaries of AI. Even if the impact isn’t as devastating as Altman says, the technology will give many companies the opportunity to do more of the less challenging work themselves and rely on the likes of WPP for the more creative human-led elements only.
But given this uncertainty, I reckon it would be better to consider investing in some of the developers of AI tools rather than those companies operating in industries that could be severely disrupted by them. Fortunately, there are plenty of these innovative tech stocks to choose from right now.
