CEO insists AI is central to Rightmove’s operations and future growth
Shares of property listings giant Rightmove plunged as much as 28% on Friday after the company warned of slower profit growth over the next two years, citing a major ramp-up in AI investments.
Rightmove said it expects operating profit growth of 3% to 5% in 2026, significantly below the 9% growth forecast for 2025, as it channels millions into upgrading internal systems, search tools, and its consumer-facing platforms with AI technology.
The company has pledged to invest £60 million over the next three years, much of which will focus on developing and integrating AI capabilities.
The steep share price fall, which briefly wiped out more than a quarter of Rightmove’s market value before closing 12.5% lower, signals investor unease about the pace and scale of the company’s tech ambitions.
Chief Executive Johan Svanstrom defended the strategy in a comany update.
“AI is now becoming absolutely central to how we run our business and plan for the future,” Svanstrom said.
“We are already working on a wide range of exciting AI-enabled innovations benefit of our partners and consumers and see vast potential utilising our leading reach and connected data.”
Svanstrom added that the company’s investments were aimed at speeding up its development efforts and building a more robust platform capable of sustaining stronger long-term growth.
Rightmove plans to increase its annual revenue growth to over 10% by 2030, and expects operating profits to rebound after 2028, targeting 12% annual increases by the end of the decade.
However, the prospect of several years of subdued profit growth before those gains materialise spooked investors.
Analysts at UBS said the company’s strategic shift raises key questions that investors are not yet able to answer and noted that they have placed their price target and rating for Rightmove under review.
“We do however expect a negative market reaction to the release with guidance implying a 5-19% downgrade to FY28 u/l operating profit vs visible alpha consensus,” UBS analysts said in a research note.
The sharp drop in Rightmove’s share price comes amid broader market jitters about the AI investment boom, which some fear may be overheating.
US technology stocks continued their recent slide, albeit at a slower pace, on Thursday, weighing on Asian and European markets before a slight recovery on Friday.
“We’ve had a remarkably smooth rally given the scale of investment that’s taken place, given the uncertainty about future cash flows, and given some of those concerns about valuation,” said Kiran Ganesh, multi-asset strategist at UBS, in an interview with CNBC’s Europe Early Edition.
While some investors view Rightmove’s AI push as a forward-looking strategy, others fear the company may be stretching its ambitions too far.
Russ Mould, investment director at AJ Bell, said that investing for future growth is sensible, but the magnitude of the market’s negative reaction suggests deep scepticism about Rightmove’s decision to commit such a large sum to AI.
“It’s possible to see how AI might help Rightmove operate more efficiently, make greater use of its increasing amounts of data and enhance user experience on the site,” Mould added.