Concerns are mounting in the stock market regarding the potential impact of artificial intelligence (AI) on the FTSE 100 company Informa plc (LSE: INF). Investors worry that the firm’s academic publishing division could face significant disruption. However, as an academic, I believe these concerns may be overstated, and the chances of AI fundamentally altering this sector are minimal.
One of Informa’s key divisions is Taylor & Francis, a publisher of academic books and journals. This division is crucial as it generates approximately 20% of Informa’s revenues and contributes significantly to its operating profits. The prevailing fear is that specialized AI tools could render journal subscriptions obsolete, as researchers might rely on AI for quick insights into the latest developments in their fields.
To understand the magnitude of this potential disruption, it is essential to consider the nature of academic research. Having completed my PhD over a decade ago, I can affirm that access to original texts is vital. For instance, students and researchers studying Plato’s Republic must engage with the original work rather than relying solely on secondary literature. While commentaries provide valuable context, they cannot replace the nuances found in the original text.
AI-generated summaries, despite their convenience, inevitably involve subjective decisions about which aspects of the material are critical. This process applies whether the summary is produced by a human or an AI. Thus, the demand for first-hand research remains strong. Academics will continue to seek original studies, as they provide the necessary depth and understanding that summaries cannot replicate.
Given these factors, the notion that Informa’s publishing division could be easily disrupted by AI appears unlikely. The idea of universities abandoning their subscriptions to academic journals is unrealistic.
Currently, Informa’s shares are down by 16% from their recent highs, primarily driven by fears surrounding AI’s influence on the publishing sector. Yet, I contend that the more pressing risk lies in the financial stability of UK universities. Many institutions are grappling with financial constraints, and some face the possibility of closure. This situation warrants attention as it could impact Informa’s customer base.
For investors considering Informa, this may be an opportune moment to buy. The company’s core business remains strong, with no imminent threat from AI that would undermine its publishing division. While the stock market is absorbed with AI concerns, discerning investors might find value in adding Informa to their portfolios.
In the current environment, it is crucial to evaluate the long-term viability of academic publishing, particularly in light of AI advancements. As the landscape evolves, the need for comprehensive, first-hand research will likely endure. Investing in Informa could prove to be a prudent choice amidst the uncertainties faced by the sector.
