Pearson not as exposed to AI as some of its rivals, says JPM

JP Morgan kept its 'overweight' rating on Pearson on Wednesday, arguing that the educational publisher is not as exposed to the potential threat of artificial intelligence as some of its rivals.

Shares in education services specialists fell sharply on Tuesday after US firm Chegg warned about the impact of ChatGPT on its homework help services. It tumbled 48%, while London-listed Pearson shed 10%.

But JP Morgan - which has a target price of 1,230p on Pearson - said in a note: "While ChatGPT could be seen as an alternative for students seeking answers to their homework, we do not see it as an alternative to Pearson’s text books, courseware and learning platforms that provide trusted programmes that are adopted by colleges, and have to be followed and consumed by students for around 70% of higher education courses.

"The difference is that Pearson provides the content and sets the questions, whereas Chegg and ChatGPT provide answers to those questions.

"In our view, ChatGPT/AI will not provide complete and structured learning programmes with trusted content."

As at 1245 BST on Wednesday, shares in Pearson had recovered 8% at 817.4p.