By Adria Calatayud

Publicis Groupe shares fell sharply after the advertising company's outlook for the year ahead failed to dispel investor concerns about the impact of artificial intelligence on its business.

Shares in Publicis were down around 8% in European afternoon trading Tuesday, on track for their biggest one-day percentage drop since April 2020, at the height of the Covid-19 pandemic. The stock has shed nearly a quarter of its value over the past year amid investors' AI fears.

The Paris-based ad group forecast organic net revenue growth of between 4% and 5% this year. Organic growth is a common metric that strips out the effects of currency fluctuations, acquisitions and asset sales.

Analysts polled by Visible Alpha expect Publicis to deliver a 4.9% rise in organic net revenue in 2026.

The ad industry is confronting uncertainty due to the rise of AI, with companies' plans to adapt to the technology under the market's scrutiny. Some investors see ad agencies as potential losers from the shift to AI, a view that company executives are trying to challenge.

Publicis expects AI to drive sustainable top-line growth over the medium term, projecting annual net revenue to rise by 6% to 7% excluding currency changes beyond this year, the company's Chairman and Chief Executive Arthur Sadoun said in a call with analysts. AI is also helping improve profitability, he said.

The company said account wins and demand for products and services powered by AI helped it post organic net revenue growth 5.9% for the fourth quarter compared with the year-earlier period. This beat analysts' expectations of a 5.1% rise, according to consensus estimates provided by the company.

In setting its outlook for 2026, though, the company went with the same range it set at the beginning of the past two years, when it ended up raising its outlook several times and overshooting its forecasts. Analysts at UBS said Publicis was unsurprisingly conservative on its prospects at this stage of the year.

Sadoun said Publicis has also benefited from a drastic reduction in competition due to last year's tie-up between U.S. peers Omnicom Group and Interpublic Group. Publicis' U.K. rival WPP, meanwhile, is preparing a new strategy under new leadership.

Publicis claimed the No. 1 spot in the industry in terms of account gains last year, with net new business wins estimated at $8.16 billion, while its big rivals lost more accounts than they won on balance, according to an analysis by J.P. Morgan. In the fourth quarter alone, however, WPP took the top spot ahead of Publicis, according to J.P. Morgan.

The company's connected media segment, which accounts for the majority of the group's revenue, was its main growth engine last quarter, with organic net revenue increasing by a high-single-percentage digit. Publicis attributed the segment's performance to market-share gains, rising demand for AI-powered products, and services and new markets.

For 2025 as a whole, Publicis' net profit edged lower to 1.65 billion euros ($1.95 billion) from 1.66 billion euros a year before. Total revenue rose 8.5% to 17.4 billion euros.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

February 03, 2026 08:51 ET (13:51 GMT)

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