Rightmove (LSE:RMV) stock has dropped 30% in the FTSE 100 since August. This slump means it’s flat since mid-2019, which is disappointing for shareholders considering the company remains a high-margin market leader.
AI spending jitters
Founded in 2000, Rightmove rose to prominence during the last great tech boom (the internet). It enjoys a powerful network effect by aggregating property listings from thousands of estate agents and developers in one digital location.
But since ChatGPT’s release in late 2022, investors have been trying to figure out the potential winners and losers of the artificial intelligence (AI) revolution. And it’s fair to say some are increasingly unsure whether the technology is good news for Rightmove.
Why? Well, first there are its planned investments of around £60m over the next three years, primarily related to AI. These include transforming the Rightmove app to improve its AI-powered search capabilities and fully leveraging Google Cloud.
Management says this spend will result in underlying operating profit growth of 3%-5% in 2026, down from a previous forecast of around 9%. Meanwhile, its previous 2028 target for revenue growth above 10% has been pushed back to 2030.
Rightmove says these investments will drive higher long-term growth. But investors appear concerned that they might not result in higher returns. In other words, more squeeze for the same juice (or even less).
ChatGPT vs Gemini
However, there might be a far deeper AI risk lurking. A great summary of this is below.
More and more viewing requests are coming from AI search tools, bypassing platforms like Rightmove, and agents are rushing to exploit this new channel. Within months, not years, a property search module will emerge on ChatGPT that makes aggregation obsolete. Why pay for property portals when AI can gather everything directly from agents’ websites?
Mark Wells, The Negotiator
To get a better sense of this threat, I asked ChatGPT if AI apps like itself could disrupt Rightmove’s platform. It said the near-term risk is near-zero because the firm’s “network effects are too entrenched“.
However, it admitted there could be long-term margin pressure if an AI-based alternative starts attracting estate agents. Overall, ChatGPT ranked the likelihood of significant AI disruption as five out of 10.
However, Google’s Gemini said if estate agents “can generate high-quality, pre-qualified leads directly without paying the portal’s high fees, the economic incentive to starve the portal of data is enormous“. It put the longer-term disruption risk at eight out of 10.
This gives an average perceived risk of seven.
| ChatGPT | Gemini | |
|---|---|---|
| Short-term risk | Low; AI just enhances app | Low |
| Long-term risk | Gradual margin squeeze, not collapse | Chance of AI bypassing portals entirely |
| Consumer behaviour | Trust in Rightmove remains high | AI apps may become a real alternative |
| Rightmove’s response | Investing in AI tools, neutralising threat | Investments may delay threat |
| Overall disruption score | 5/10 (medium) | 8/10 (high) |
My view
Looking at Rightmove’s app, I think its filter-based interface does look outdated in the age of AI. But that’s exactly why management is investing in new AI-powered search capabilities.
Rightmove remains the undisputed market leader, capturing over 70% of all consumer time spent on UK property portals. And while the operating margin is expected to dip in 2026, it will still be an enviable 67%, according to analysts.
The stock is currently trading at around 20 times next year’s forecast earnings, which is a notable discount to previous years. It looks too cheap to me, while a forecast 2.1% dividend yield and ongoing share buybacks add weight to the investment case.
I rate Gemini’s AI risk score as overblown. For investors who agree, I think Rightmove is well worth considering today at 572p.
