Wells Fargo Sees Thomson Reuters as an ‘AI Beneficiary’ – Upgrades Stock as Fears Prove Overblown
New York, NY – October 26, 2023 – In a significant boost for investors, Wells Fargo has upgraded Thomson Reuters (TRI) to Overweight from Equal Weight, signaling a strong belief in the company’s resilience against emerging artificial intelligence (AI) competition. This breaking news comes as investor anxieties surrounding AI rivals eroding Thomson Reuters’ dominant position in the legal research market have weighed heavily on the stock. The upgrade is a clear message to the market: the AI fears are largely misplaced.
AI Concerns ‘Misplaced,’ Says Wells Fargo
The brokerage firm argues that recent market reaction, particularly since Thomson Reuters’ second-quarter results, has unfairly discounted the company’s prospects. Specifically, the rise of Harvey AI, an OpenAI-backed startup gaining access to LexisNexis’ legal database, sparked concerns that Thomson Reuters’ long-held leadership was under threat. However, Wells Fargo analysts believe Harvey AI’s reach is limited, functioning more as a distribution platform than a genuine disruptor in the complex world of legal research.
“TRI has increasingly been labeled an AI loser following the rise of Harvey AI,” the analysts wrote in a research note. “We view this as a mischaracterization. Harvey’s access to LexisNexis doesn’t equate to a comprehensive challenge to Thomson Reuters’ established infrastructure and tailored solutions.”
Thomson Reuters’ AI Head Start & Product Rollout
Wells Fargo highlights that Thomson Reuters already possesses a significant head start in applying AI to legal research. The company’s platforms, like Westlaw Precision and Advantage, are specifically designed to integrate seamlessly into the workflows of legal professionals – a crucial advantage over more generalized AI tools. This isn’t about simply *adding* AI; it’s about building AI *into* the tools lawyers already rely on.
The rollout of Westlaw Advantage is particularly promising. Wells Fargo views each upgrade cycle as a catalyst for new growth, forecasting legal revenue growth of 8.4% in 2025 and 9% in 2026. This optimistic outlook is fueled by strong recurring revenue, currently running at 9%, and anticipated improvements in transactional revenue as comparisons to previous periods become more favorable.
Beyond Legal: Tax & Accounting Remain Secure
The positive assessment extends beyond the legal segment. Wells Fargo believes Thomson Reuters’ tax and accounting business is largely shielded from AI disruption. The inherent complexity of tax law and the high costs associated with switching providers create a significant barrier to entry for new AI-powered competitors. This segment provides a stable foundation for overall growth.
Price Target Raised: A Vote of Confidence
Reflecting its bullish stance, Wells Fargo has raised its price target for Thomson Reuters to $212, up from $187. The firm explicitly positions TRI as an “AI beneficiary,” arguing that the company’s ability to leverage AI will enhance its pricing power and expand its market share. This isn’t a story of AI *replacing* Thomson Reuters; it’s a story of AI *empowering* it.
This upgrade underscores a broader trend in the financial markets: a reassessment of companies perceived as vulnerable to AI. Savvy investors are recognizing that established players with strong foundations and a proactive approach to AI integration are often best positioned to thrive in the evolving landscape. Keep an eye on Archyde for continued SEO-driven coverage of this Google News-worthy story and other breaking news developments in the financial world.
