FTSE 100 Data Giants LSEG and RELX Hit by AI-Driven Sell-Off
Investors fear Anthropic's new productivity tools could disrupt traditional data business models, though some fund managers call the panic speculative.
Shares of London Stock Exchange Group (LSEG) and RELX plummeted recently as investors reacted to the release of a new productivity tool from AI developer Anthropic. The sell-off reflects a growing market anxiety that large language models (LLMs) could commoditize the delivery of professional data, threatening the core business models of established software and information providers.
LSEG and RELX emerged as some of the steepest decliners on the FTSE 100 during the volatility. RELX saw its shares fall 14%, while LSEG dropped 13%, according to reports from Interactive Investor. The downturn was part of a broader "AI software sell-off" that also impacted other UK-listed firms including Sage, Experian, and Rightmove. Despite the downward pressure on their stock prices, both LSEG and RELX utilized the period of elevated volatility to continue their existing share buyback programs.
The Infrastructure vs. Application Divide
This market reaction is rooted in a widening divide between what investors call "AI winners" and "AI losers." The winners are typically the companies building the underlying infrastructure—such as chipmakers and cloud providers—while the losers are those whose services might be replaced or rendered obsolete by generative AI. In this framework, data providers are viewed as vulnerable if AI tools can synthesize or deliver information without the need for a traditional subscription-based intermediary.
The Proprietary Data Moat
However, some industry experts argue that the market is misreading the relationship between AI and data. Nick Train, manager of Finsbury Growth and Income (FGT), described the reaction as an "indiscriminate sell-off, arguably even a panic." Train asserts that the very tools causing the panic, such as Anthropic's Claude, actually rely on the high-quality, proprietary data held by companies like LSEG and RELX to remain effective. From this perspective, exclusive data acts as a "moat" that makes these companies essential partners to AI developers rather than victims of their technology.
Long-Term Implications
The central conflict for the industry is whether AI will act as a disruptor or an amplifier. If AI tools can successfully bypass traditional data providers, the long-term valuations of the UK's largest data-driven enterprises could be permanently reset. Conversely, if proprietary data remains the critical bottleneck for AI accuracy, these firms may see their value increase as their assets become more sought after.
What remains to be seen is how quickly these companies can adapt their delivery models. Mark Sheppard noted that when a business is forced to change its model, it is rarely a quick process. Investors will be watching closely to see if LSEG and RELX can integrate AI into their own offerings fast enough to offset the perceived threat of commoditization.