Rightmove Shares Downgraded as AI Investment Pressures Near-Term Profits

Rightmove shares (LON:RMV) faced downward pressure following a UBS downgrade, reflecting market concerns over the company's ambitious artificial intelligence (AI) investment strategy and its impact on near-term profitability. The property portal's shift towards AI, while aimed at long-term growth, has prompted analysts to reassess its immediate financial prospects.

The stock experienced a significant drop after Rightmove announced plans to allocate approximately £18 million to AI initiatives in 2026. This investment is intended to upgrade internal systems, enhance customer applications, and develop AI-driven tools for estate agents. However, markets reacted negatively to the news, sending shares tumbling as much as 28% to a two-year low of 474.5 pence. The stock has declined -11.41% YTD, but has stabilised during today's session, stemming the flow of losses.

Rightmove projects operating profit growth of 3% to 5% in 2026, a considerable decrease from the 9% growth anticipated for 2025. Operating margins are also expected to decline from a projected 70% to 67%. Despite these short-term headwinds, Rightmove maintains its long-term ambition of achieving at least 10% annual revenue growth and 12% underlying operating profit growth by 2030.

UBS analyst Jo Barnet-Lamb downgraded Rightmove from “Buy” to “Neutral,” reducing the price target from 879p to 585p. The analyst highlighted that while the AI-driven strategy targets long-term growth, near-term profits are expected to be pressured. This sentiment reflects broader market caution regarding the immediate impact of substantial AI investments on profitability.

The market's response underscores the challenges Rightmove faces in balancing its AI investments with shareholder expectations.