Shares in Rightmove plc tumbled sharply on Friday after the company announced it will significantly increase investment in artificial intelligence and other strategic initiatives from 2026 to 2028, while warning that underlying operating profit growth for 2026 will be just 3 % to 5 %—down from around 9 % reported at the end of the first half of 2025.

The London-listed stock fell as much as 28 % in early trading, marking a two-year low of 474.5 pence, before narrowing losses to around 18.8 % at 532.6 pence by 09:30 GMT.

The company said the slower profit growth is a trade-off as it allocates around £18 million ($24.2 million) next year towards AI development and other transformative projects.

Chief Executive Johan Svanstrom stated that “AI is now becoming absolutely central to how we run our business and plan for the future,” adding that the company is deliberately taking a short-term performance hit to accelerate its long-term growth potential.

Rightmove said that margin expectations for 2026 will dip to about 67 %, from an earlier forecast near 70 %.

Revenue growth is still expected at 8 % to 10 %, similar to 2025.

Analysts responded cautiously.

While some, such as RBC Capital Markets, argued the fundamentals remain sound and the market may be overreacting, others at J.P. Morgan flagged investor scepticism around the timing and returns of Rightmove’s AI strategy, especially after the company previously rejected takeover bids last year from REA Group which had sought to acquire it.

The move reflects broader market caution over large-scale AI spending: companies across sectors are investing heavily in innovation, but investors remain alert to the risk of a technology bubble reminiscent of the dot-com era.

In Rightmove’s case, the company emphasised its long-term goal of double-digit profit growth, saying the current pause is a deliberate step to build future resilience.

In its first half of 2025 the firm reported revenue of £211.7 million, up 10 % year-on-year, and underlying operating profit up 9 % to £151.3 million, with margins at approximately 71 %.

However, the new guidance suggests that the growth rate will moderate in the near term before the payoff from its strategic investments materialises.

With economic headwinds still present in the UK housing market—rising inflation, expectations of tax changes and interest-rate uncertainty—Rightmove’s decision to lean into technology transformation at the expense of short-term earnings underscores a pivot from mere market leader to digital-platform innovator in the property-ecosystem space.

Investors will be watching closely whether the pay-off arrives as promised or whether the sector’s cyclical pressures dominate.