Stocks in the online classifieds sector, such as Rightmove PLC and Auto Trader Group PLC, have lost a combined market value of around 40% over the past six months, with artificial intelligence anxiety a main cause, according to UBS.
The AI debate is likely to rage on until at least the second half of the year, the Swiss bank reckons, based on continued investor uncertainty.
Events that triggered the derating included a fundraising by AI property portal Jitty, the launch of Zillow's ChatGPT app in October and Rightmove's announcement of a new growth and investment plan in November.
Investor concern centres on whether AI could undermine the classifieds model, force higher investment spending or erode margins if platforms end up paying large language models for traffic.
Analyst Jo Barnet-Lamb argues that full AI disintermediation is unlikely, saying large language models would need to invest heavily to build and monetise high-quality listings, for relatively little reward.
With plenty of competition between AI platforms and reputational risk in cutting out trusted brands, the analyst says, "we think the juice is unlikely to be worth the squeeze".
The more realistic risk is to margins. Extra investment and potential revenue sharing could weigh unevenly across the sector, with some platforms better protected than others.
Crucially, UBS sees the debate as shifting. Investors are starting to ask when to buy rather than whether to return at all.
When confidence does turn, the bank expects capital to gravitate towards the highest-quality, most AI-ready names, which it sees as continental names Scout24 and Schibsted Marletplaces Group.
Rightmove was reiterated on a 'neutral' rating, with its share price target cut 17% due to lifting the discount rate in the discounted cash flow model.