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London Stock Exchange Group Shares Rebound as AI Fears Ease, Elliott Stake Boosts Confidence
A sharp rebound has lifted London Stock Exchange Group’s (LSEG) shares after a February sell‑off that saw the stock tumble nearly 13% in a single day amid concerns that large‑language models such as Anthropic’s Claude could erode the value of the group’s data business. The rally has pushed the share price up 27% since U.S. activist investor Elliott Management began building a “significant stake” in the company, though the stock remains 23% below the peak it reached in February 2025.
The February drop was part of a broader sell‑off in software stocks, as investors questioned whether AI could replace the data that LSEG sells to financial institutions. In response, LSEG highlighted its Model Context Protocol (MCP) server, which delivers proprietary datasets to third‑party AI agents and large‑language models. According to the company’s February 26 full‑year results, the MCP server already serves more than 90 customers and has a pipeline of 60 additional clients. In its first‑quarter trading update in April, LSEG reported that first‑quarter income was up 9.8%, its strongest performance in more than five years.
Investor sentiment has improved markedly. Of the 20 analysts covering LSEG, 90% rate the stock either a “buy” or a “strong buy,” and none have issued a sell rating. Analysts expect shares to rise by an average of 35% over the next 12 months based on target‑price revisions. UBS analyst Michael Werner noted that “there is still a ‘show‑me’ story for AI. It’s one thing to have usage, it’s another to start charging people.” UBS removed LSEG from a basket of companies it believed could be disrupted by AI, although the reason for the change was not disclosed.
Elliott Management’s involvement has also drawn attention from other shareholders. Lindsell Train, a top‑five LSEG shareholder, has been adding to its position, and Nick Train, who manages the group’s UK equity portfolios, said in a May note that the decline in London‑listed data and software stocks offers a “once‑in‑a‑decade opportunity to access exceptional growth assets at fundamentally the wrong price.” The Blue Whale Growth Fund, which holds a small stake in LSEG, remains cautious, stating that the risk of AI disruption is not minimal.
From a valuation perspective, LSEG shares trade at about 18 times forward earnings, a discount of roughly 30% to Moody’s and 40% to MSCI, yet the stock trades at a premium to U.S.‑listed data and analytics firm FactSet. Deutsche Bank analyst Benjamin Goy described the valuation as “pretty cheap compared to other data companies.” The group’s £3 billion ($4 billion) share‑buyback programme, announced in February, has been cited by investors and analysts as a potential value‑enhancing action, with some even suggesting a spin‑off of the London Stock Exchange itself.
LSEG’s CEO, David Schwimmer, has defended the company’s resilience against AI, arguing that it is unlikely that LSEG’s data could be replaced or replicated by the technology. The group’s partnership with Microsoft, a 10‑year agreement announced in December 2022, has been less influential on the equity story than initially expected, according to UBS. Investor focus has shifted to how LSEG will perform as its client base increasingly adopts AI.
The company also faces regulatory and market‑structure challenges. A UK plan to create an equities “tape” that would publish data currently charged by LSEG could threaten its data business. LSEG remains the largest customer of Reuters, which supplies news for its Workspace platform.
In summary, LSEG’s share price rally reflects a gradual easing of AI‑related fears and the impact of Elliott Management’s stake. The group’s recent financial performance, growing MCP customer base, and ongoing buyback programme provide a foundation for a potential upside, but investors will continue to monitor the company’s ability to monetize AI initiatives, regulatory developments around the UK equities tape, and the broader market’s adoption of large‑language models.
The February drop was part of a broader sell‑off in software stocks, as investors questioned whether AI could replace the data that LSEG sells to financial institutions. In response, LSEG highlighted its Model Context Protocol (MCP) server, which delivers proprietary datasets to third‑party AI agents and large‑language models. According to the company’s February 26 full‑year results, the MCP server already serves more than 90 customers and has a pipeline of 60 additional clients. In its first‑quarter trading update in April, LSEG reported that first‑quarter income was up 9.8%, its strongest performance in more than five years.
Investor sentiment has improved markedly. Of the 20 analysts covering LSEG, 90% rate the stock either a “buy” or a “strong buy,” and none have issued a sell rating. Analysts expect shares to rise by an average of 35% over the next 12 months based on target‑price revisions. UBS analyst Michael Werner noted that “there is still a ‘show‑me’ story for AI. It’s one thing to have usage, it’s another to start charging people.” UBS removed LSEG from a basket of companies it believed could be disrupted by AI, although the reason for the change was not disclosed.
Elliott Management’s involvement has also drawn attention from other shareholders. Lindsell Train, a top‑five LSEG shareholder, has been adding to its position, and Nick Train, who manages the group’s UK equity portfolios, said in a May note that the decline in London‑listed data and software stocks offers a “once‑in‑a‑decade opportunity to access exceptional growth assets at fundamentally the wrong price.” The Blue Whale Growth Fund, which holds a small stake in LSEG, remains cautious, stating that the risk of AI disruption is not minimal.
From a valuation perspective, LSEG shares trade at about 18 times forward earnings, a discount of roughly 30% to Moody’s and 40% to MSCI, yet the stock trades at a premium to U.S.‑listed data and analytics firm FactSet. Deutsche Bank analyst Benjamin Goy described the valuation as “pretty cheap compared to other data companies.” The group’s £3 billion ($4 billion) share‑buyback programme, announced in February, has been cited by investors and analysts as a potential value‑enhancing action, with some even suggesting a spin‑off of the London Stock Exchange itself.
LSEG’s CEO, David Schwimmer, has defended the company’s resilience against AI, arguing that it is unlikely that LSEG’s data could be replaced or replicated by the technology. The group’s partnership with Microsoft, a 10‑year agreement announced in December 2022, has been less influential on the equity story than initially expected, according to UBS. Investor focus has shifted to how LSEG will perform as its client base increasingly adopts AI.
The company also faces regulatory and market‑structure challenges. A UK plan to create an equities “tape” that would publish data currently charged by LSEG could threaten its data business. LSEG remains the largest customer of Reuters, which supplies news for its Workspace platform.
In summary, LSEG’s share price rally reflects a gradual easing of AI‑related fears and the impact of Elliott Management’s stake. The group’s recent financial performance, growing MCP customer base, and ongoing buyback programme provide a foundation for a potential upside, but investors will continue to monitor the company’s ability to monetize AI initiatives, regulatory developments around the UK equities tape, and the broader market’s adoption of large‑language models.
