LSEG’s markets arm is doing the heavy lifting while investors argue about AI Proactive uses images sourced from Shutterstock
The debate over London Stock Exchange Group PLC (LSE:LSEG) has fixated on whether artificial intelligence will erode its data subscriptions, and in the process has missed where the growth is actually coming from.
That is the argument in a new ‘buy note ‘, which sees scope for the company to beat its own revenue and margin guidance this year.
The subscription business, the source of most of the AI anxiety, is performing broadly as management said it would, with 6.5% organic constant currency revenue growth expected in 2026.
Within that, Workflows growth of 2.8% has slowed by 0.3 percentage points, while Data and feeds has accelerated by 0.9 points to 7.5%.
Neither figure suggests the disruption bears have priced in.
The overlooked engine is the Markets division, which the broker says has outperformed and is driving upgrades to consensus forecasts.
That matters for the valuation because these are not cheap businesses in their own right.
Tradeweb, in which LSEG holds a majority stake, trades on 22 times consensus earnings for 2027, while listed peers of the post-trade operation change hands at 19 times.
The note models 8.1% organic growth for 2026, above both the 7% to 7.5% company guidance and the 7.8% consensus that preceded the results.
On margins, it estimates a 50 basis point tailwind to earnings before interest, tax, depreciation and amortisation.
That would take LSEG past its 51.5% target for this year even if it brings investment forward, and past the 50 basis points of expansion guided for 2027.
The broker expects revenue guidance to be raised at the third-quarter results.
One gap to fill before publication: the source material does not identify which house wrote the note, and house style requires the broker named on first reference.