RBC Capital Markets has criticised what it says was a market overraction to Rightmove’s announcement that profits would be hit by increased investment into AI on Friday, when share prices fell by as much as 28% during trading.
‘We think the market has it wrong’, RBC said in a statement on Tuesday. ‘Rightmove is not broken, it does not need fixing, however the investments announced today, if executed well, should lead to a better bigger business in the years to come’.
On Friday, Rightmove said it would accelerate execution in customer innovation to transform its app and AI-powered search capabilities, as well as introduce AI interfaces ‘to drive efficiency, speed and value’.
Chief executive Johan Svanstrom (pictured) said AI was ‘becoming absolutely central’ to Rightmove’s plans, with a large portion of a planned £60 million, three-year investment earmarked for AI.
But while investors reacted negatively to the announcement, RBC said Rightmove’s plans ‘will end up changing the game’ for the home moving sector, with more products and services available to estate agents, house builders and end users.
‘There are also risks that AI could replace Rightmove, but in that case surely it’s better Rightmove is in the game than watching from the sidelines’, RBC said.
“We also would suggest that it if the last 25 years teach us anything it is that it will be harder than the bears think for estate agents, housebuilders and homemovers to be weaned off Rightmove, or to kick their Rightmove habit.”
Rightmove’s announcement comes as speculation that the AI bubble is about to burst gains increasing significance. Japan’s SoftBank, which has invested tens of billions of dollars into global AI businesses, had sold its entire stake in Nvidia, which produces chips crucial to the technology.
And last month, Michael Burry, the US investor who predicted the US housing market crash in 2007, bet $1.1 billion on falls in shares of Nvidia and AI data analysis company Palantir, fuelling rumours of an imminent crash.
