London Stock Exchange: Early Signs That AI Is a Tailwind

Key Morningstar Metrics for London Stock Exchange Group

• Fair Value Estimate
  : GBX 11,900
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Wide
• Morningstar Uncertainty Rating
  : High

London Stock Exchange Group LSEG released a first-quarter trading update showing good traction in the data and analytics business, promising adoption of its Model Context Protocol connectors, and strength across its trading and clearing venues, driven by market volatility.

Why it matters: LSEG’s business model had come under pressure from the February launch of the Claude legal plug-in, raising concerns that its data business is easier to replicate with large language models and high-ticket subscription-based revenue will give way to lower-revenue API feeds.

• Total income excluding recoveries grew 10% year over year on an organic and constant-currency basis. Subscription business growth of 6% was good, but the markets businesses stood out across the board, growing 16% collectively amid heightened market volatility in the quarter.
• The strong first-quarter performance has increased management’s confidence to achieve organic constant-currency revenue growth in the upper half of the 6.5%-7.5% 2026 guidance.

The bottom line: We maintain our GBX 11,900 fair value estimate and Wide Morningstar Economic Moat Rating. We believe LSEG will be an artificial intelligence winner and still see upside in its share price, despite having already fully recovered from the Claude-driven selloff in February.

• First-quarter performance tracks above our full-year growth expectation. Prolonged market volatility provides risk to the upside for our valuation, but shares will ultimately be priced on progress in the subscription business and visibility into MCP economics.

Coming up: LSEG will update the market on the MCP commercial framework with first-half results. For now, LSEG is framing MCP access as a new and additional product next to existing commercial agreements.

• LSEG will have to address potential cannibalization concerns around its MCP product eating into data feeds or workstation subscriptions.