AI disruption

French operator of call centres Teleperformance painfully experienced yesterday what the AI disruption can do to investor confidence. At one stage the stock tumbled 29% intraday after Swedish payments and shopping service, Klarna, said that its OpenAI-powered assistant would handle two thirds of the company's customer service chats. Teleperformance felt obliged to issue a statement that "current activity in no way reflects the negative conclusions in its business that could be drawn from the technological developments mentioned in this communication" and would maintain its 500 mil EUR share buyback program. While we agree AI can handle the basic customer requests, we would expect customers to need a ‘human touch’ for more complex complaints and request handling. Teleperformance is already offering these ’hybrid’ solutions. The stock is down 54% over the past 12 months. We used the share price weakness to increase our positions as the stock trades at 8.2 times PER, not bad for a cash flow generative business with a ROE of 20%.