Don’t try to catch a falling knife!

Thomson Reuters’ rapid AI expansion hitting earnings expectations

Toronto-based Thomson Reuters Corporation (TSX: TRI) is a media giant, operating in over 100 countries. Its focus is selling electronic information, technology, and software solutions to professionals, corporations, and governments, primarily through subscriptions, in such fields as legal, tax, compliance, and accounting. The company is actively integrating artificial intelligence (AI) into its products and services.

The stock has been in a deep dive since mid-2025 and shows no sign of pulling out of it. Year-to-date, the shares are down almost 35% on the TSX. What’s going on?

The company reported first-quarter 2026 results on May 5, and at first glance you’d think everything was going just fine. TRI posted revenue of just over $2 billion in the quarter, up 10% from the same period last year. Diluted earnings per share were $1.03 (the company reports in U.S. dollars), a 7% improvement over the prior year. Free cash flow increased 19% year-over-year to $332 million.

The results topped Q4/25 results on the back of solid organic growth of 7%, with the three segments (Legal, Corporate, and Tax & Accounting) posting solid subscription growth and high product demand.

“We have delivered an encouraging start to 2026,” said CEO Steve Hasker. “Our positive momentum reflects the trust professionals place in Thomson Reuters in the moments that matter most. Across law, tax, audit and compliance, professionals accountable for high-stakes outcomes are choosing our AI products, built to the standards their work demands – grounded in authoritative content, designed and tested by our domain experts, and created to produce results that can be verified and audited under real-world scrutiny. We call this ‘fiduciary-grade AI.’ ”

In February, the company announced a 10% dividend increase, bringing the annual payment to US$2.62 for a yield of 3.1%.

The company also said it will repurchase up to $600 million of additional common shares under an amended Normal Course Issuer Bid that was approved by the TSX. The company repurchased 2.5 million of its common shares for a total of $262 million.

TRI also delivered strong 2026 guidance, featuring organic revenue growth of 7.5% to 8% and 100 basis points of adjusted EBITDA margin expansion with special focus on AI-driven product innovations.

Looks good…on paper

It all looks good on paper. So why is the stock in free fall?

Blame AI. The company is rapidly employing AI features in its product lines, but investors appear convinced that the rapid expansion of the technology will disrupt many of TRI’s core markets, resulting in declines of revenues and profits.

There’s also profit-taking at work. The stock reached a high of just under $300 in July 2025. At that point it had a trailing p/e in the 40 range. It’s only natural in such situations that some people would trim holdings, and that appears to have happened here.

At this point, the stock looks oversold, with a current p/e of 24.86, but given the uncertainty over the disruptive force of AI, investors aren’t going to flock back soon. Investors can hold existing positions but don’t add more at this time. It would be like catching a falling knife.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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