Rightmove stock tumbles as AI spending plan sparks investor caution

Shares in British real estate portal Rightmove plunged as much as 28% on Friday after the company warned of slower profit growth in the coming years, citing accelerated investments in artificial intelligence.

The drop marked a new 52-week low for the London-listed company before it pared losses to trade around 12% lower.

The firm said it expects operating profit growth of 3% to 5% in 2026, well below its earlier forecast of 9% this year.

It attributed the slowdown to increased AI spending aimed at upgrading its internal systems, consumer-facing app, and property search tools.

Rightmove is also exploring AI-driven applications for estate agents to enhance efficiency and improve customer engagement.

Company plans major AI investment push in keeping with the global pattern

Rightmove plans to invest roughly £18 million ($24.2 million) in AI and related initiatives in 2026.

The company expects the investments to temporarily weigh on profitability, with margins projected to fall to 67%, down from a previously anticipated 70%.

“AI is now becoming absolutely central to how we run our business and plan for the future,” Chief Executive Johan Svanstrom said.

He added that the company’s increased expenditure between 2026 and 2028 is designed to lay the groundwork for double-digit profit growth in the longer term.

Companies worldwide have been racing to incorporate AI into their operations, with many spending heavily despite investor concerns about the sustainability of such investments.

Analysts have warned that enthusiasm for AI could mirror the speculative fervour of the early dot-com era if returns fail to meet expectations.

Market pressure amid broader economic uncertainty

While the UK housing market has seen signs of renewed buyer activity, inflationary pressures and the looming government budget announcement later this month have kept overall sentiment cautious.

Rightmove’s shares have been under scrutiny since the company rejected multiple takeover bids last year from Rupert Murdoch’s REA Group.

The rejections sparked debate over the company’s long-term strategic direction and valuation.

Analysts divided over Rightmove’s strategy

Analysts remain divided on whether Rightmove’s heavy AI investment will deliver meaningful returns.

"We want to stress that we see additional investments into consumer innovation, new AI tools, and R&D growth as the right step, but flag ongoing investor skepticism on those initiatives," JP Morgan analysts said in a note.

UBS analysts said the “strategic pivot poses important questions that the market will not yet have answers to” and moved its price target and rating for Rightmove to under review.

Rightmove expects annual revenue growth of 8% to 10% between 2026 and 2028, in line with its current guidance.

Revenue for 2024 came in at £389.9 million ($512.3 million).

However, RBC Capital Markets analysts warned that the company’s latest projections lag consensus expectations.

Assuming a midpoint estimate, they said operating profit could be about 6% below forecasts by 2028, with an operating margin of 67.4% versus a consensus of 70.5%.

RBC added that Rightmove’s previously stated revenue ambitions may take longer to achieve, noting that “management will be under pressure to balance near-term cuts with sustainable long-term growth.”