UBS has downgraded Teleperformance, a company with approximately 400, 000 customer service agents globally, due to the "significant uncertainty" caused by the emergence of artificial intelligence (AI). The investment bank has changed its rating for Teleperformance's stock from "buy" to "neutral" over concerns that AI tools could disrupt the customer experience (CX) industry, which the company currently dominates. With fears mounting, the stock has plummeted by more than 50% in the past year to 116 euros ($122). UBS has also reduced its price target for Teleperformance's stock by 65% to 130 euros per share, compared to its previous target of 380 euros per share. The bank predicts a mid-term revenue growth of only 4. 5%, considerably lower than the 9% annual growth rate achieved over the past ten years. Analysts anticipate AI technology to bring about affordable customer service solutions, leading to increased price deflation in the industry. UBS analysts, led by Nicole Manion, explained the downgrade in a note to clients on Sept. 27, emphasizing the potential long-term impact of AI disruption.

They highlighted previous instances of disruptive technology shifts, such as digitalization and offshoring, which resulted in prolonged depressions in valuations unless financial performance improved. However, as a leading player in the market, Teleperformance should be able to partially mitigate the impact by incorporating AI into its operations to enhance employee productivity and offer new services, UBS noted. Recognizing the changing landscape of the sector, the France-based company recently announced the integration of generative AI into its analytics platform, "TP Interact. " This AI-enhanced platform enables businesses to obtain intelligent insights from customer interactions across multiple channels and languages, including voice, chat, email, and social media. Despite the current challenges, analysts at Berenberg believe Teleperformance will benefit from AI in the near future. In a note to clients on Sept. 27, Berenberg analyst Carl Raynsford stated, "Teleperformance's growth may be affected by increased automation in the low-tier CX market, resulting in reduced pricing power. However, more complex queries will command higher prices and margins. " Raynsford predicts that the company's shares will rise by 85% to reach 211 euros per share within the next 12 months.