The 'Claude crash' refers to the market turmoil triggered by the introduction of plug-in legal products from AI firm Anthropic into its Claude Cowork office assistant. This development has sparked fears that artificial intelligence could disrupt established data companies, including Relx, London Stock Exchange Group, Experian, Sage, and Informa.
Relx's Market Position and AI Concerns
Relx, formerly known as Reed Elsevier, operates as a global provider of information-based analytics and decision tools for professional and business customers. Its share price soared from £5 in 2012 to £41 in May last year, valuing the company at approximately £70 billion and making it the fifth-largest in the FTSE 100 index. However, since the launch of Claude's plug-ins, Relx's shares have plummeted by half, reflecting a shift in market sentiment from viewing the company as an AI beneficiary to fearing a collapse in its 34% profit margin.
Company Confidence and Financial Performance
In its full-year results, Relx demonstrated unwavering confidence. Revenues increased by 7% to £9.6 billion, while operating profits rose 9% to £3.3 billion. The company forecast another year of strong growth in 2026, raised its dividend by 7%, and announced an expanded share buyback programme of £2.25 billion. Chief executive Erik Engström emphasised that AI evolution would continue to drive customer value and growth for many years, highlighting Relx's unique position in the market.
Engström argued that AI tools are not new to Relx, with recent launches focusing on workflow products for document management in specific projects. The company's strength lies in its comprehensive, reliable data, which includes public, historical, licensed, and proprietary information enriched with decades of judgments and interpretations. This data is crucial for scientists, lawyers, insurance professionals, and risk assessors, with AI enhancing its value and usability.
Strategic Response and Share Buybacks
Relx maintains that it will not surrender its proprietary information, which forms the core of its business value. Instead, it can engage in limited licensing deals with AI firms and develop its own workflow products. Despite a modest 2% share price bounce following the results, market anxieties persist regarding the future of AI and the depth of Relx's competitive moat.
The company's tactical approach is clear: if growth is sustainable, as Engström asserts, and shares are trading at half their previous price, continuing aggressive share buybacks is prudent. The £2.25 billion buyback, up from £1.5 billion, represents 6% of the equity base. Sustaining this pace could significantly boost earnings per share, assuming business projections hold firm.
This strategy mirrors activist investor Elliott Management's recommendations for London Stock Exchange Group, where similar AI concerns exist. For truly confident companies, maintaining buybacks is a sound move to navigate market uncertainties and reinforce shareholder value.
