Concerns surrounding the impact of artificial intelligence (AI) on the stock market have led to a notable decline in shares of FTSE 100 company Informa (LSE:INF). Despite these worries, experts suggest that the fears regarding the company’s academic publishing division may be overstated.
One of Informa’s significant operations is its Taylor & Francis division, which is responsible for publishing a wide range of academic books and journals. This sector not only represents approximately 20% of Informa’s overall revenues but also accounts for a substantial portion of its operating profits. Given its critical role, any disruption to this division would pose a significant risk to the company.
The prevailing concern is that AI-driven research tools could diminish the need for journal subscriptions among researchers. If these tools can provide an adequate overview of the latest academic developments, the argument goes, traditional publishing might be at risk.
From an academic perspective, the reality of this situation is more nuanced. Having received a PhD over a decade ago and having worked within academia since, I can assert that the reliance on first-hand access to original research remains strong. The short answer to whether researchers will continue to seek traditional journal subscriptions is a definitive “yes.”
In disciplines such as philosophy, where examining texts like Plato’s Republic is essential, secondary literature cannot replace original works. While commentaries and summaries may provide valuable insights, they are insufficient for a comprehensive understanding.
The limitations of AI summaries are noteworthy. Such tools inevitably prioritize specific aspects of texts over others, which alters the interpretation. This is a fundamental challenge regardless of whether the summary is created by a human or generated by AI. Therefore, the demand for first-hand research is unlikely to diminish simply due to the availability of AI-generated summaries.
With Informa’s shares currently down by 16% from their peak, the market appears to be reacting primarily to AI concerns. Nevertheless, investors should take note of the deeper issues affecting the academic landscape. The financial viability of many UK universities is under scrutiny, with numerous institutions facing potential closure due to financial pressures.
While the fear of AI replacing traditional academic publishing may be exaggerated, the broader risk lies in the stability of the customer base. If universities struggle to remain operational, it could pose a real threat to Informa’s business model.
In light of these factors, there may be an opportunity for savvy investors. While the market is focused on AI’s potential to disrupt journal subscriptions, the enduring need for original research suggests that Informa could remain a sound investment.
As always, potential investors should conduct thorough research and consider expert insights. Informa may still be a worthwhile addition to investment portfolios, especially given the ongoing importance of traditional academic publishing in an ever-evolving educational landscape.
