Carsales' AI Scare Meets a Data Moat Fund Managers Say LLMs Can't Match

A steep sell-off across global classifieds hit Carsales hard, but its proprietary consumer data and international growth are winning bulls back.

6 Oct 2026 · 4 min read

Carsales fell nearly 38 percent from around $36.78 to a low near $22.80 as AI-disruption fears swept through online classifieds businesses globally, before recovering to around $29.59 by August as fund managers increasingly argue vehicle marketplaces are among the harder businesses for AI to replicate.

AI fear becomes the dominant narrative

Firetrail Investments exited its position, believing Carsales is performing well operationally but seeing risk to its business model from potential disruption, and expecting classifieds could remain out of favour as an investment until AI's impact becomes clearer. Katana Asset Management said concerns AI would interrupt the business model, combined with a broader technology sector sell-off, drove the share price decline, even as it continued to view Carsales as best in breed with genuine offshore expansion optionality. Cooper Investors grouped Carsales with REA Group and their offshore equivalents as marketplace businesses that had experienced material de-ratings, reflecting a market view that new large language models would alter competitive dynamics across the sector. Oracle Advisory Group sold its position to raise cash for other opportunities.

Bulls push back: proprietary data isn't easily replicated

Yarra Capital Management kept an overweight position throughout, arguing there is no evidence anywhere globally to date of disruption to market-leading online marketplaces from AI search, and pointing to the embedded nature of Carsales's products in industry ecosystems and its strong proprietary data advantage, alongside long-term growth potential spanning Australia at 41 percent of revenue, Trader Interactive in the US at 25 percent, and Webmotors in Brazil at 17 percent. Wilson Asset Management named Carsales its pick in January, describing the stock as trading at scorched-earth levels it found genuinely interesting, with expected strong US economic growth setting up its Trader Interactive recreational vehicle business well. Blackwattle Investment Partners noted the fall was largely in line with the broader sell-off in high price-to-earnings stocks, leaving the stock on around 27 times forward earnings, a modest premium for a business with proven growth opportunities across the US, South Korea and other geographies.

There is no evidence of disruption to market leading online marketplaces from online search anywhere globally to date.

— Yarra Capital Management, Monthly Report, January 2026

By July, the valuation case becomes irresistible to some

Vertium Asset Management said Carsales had been washed out along with many AI-impacted names, arguing it is very difficult to replicate a marketplace like Carsales's through AI-generated code alone, and does not see AI as much of a threat to the business. Auscap Asset Management named it a top mid-cap pick, arguing mid-cap stocks broadly, spanning insurance broking, retail and healthcare, are trading near their lowest multiples in decades. Investors Mutual Limited called it a massive de-rating opportunity, trading in the low 20s multiple, arguing Carsales holds fantastic data on what consumers want to buy, at what price and which make, an advantage it believes large language models cannot compete with.

Carsales has fantastic data on what consumers want to buy, what price point they're willing to pay and what make, which the LLMs can't compete with.

— Investors Mutual Limited, Article, July 2026

Perennial Partners included Carsales among its high-quality, oversold businesses offering compelling relative valuation. Wilson Asset Management, more cautious by July than it had been in January, said Carsales remains a great business with the biggest position in Australia and growing international franchises across the US, Brazil and Korea, but is holding off adding at current levels, saying the hesitation is about expectations rather than fundamentals, and that it wants to see signs of earnings re-accelerating before buying more at around 20 times forward earnings.

August's result: in-line, but some quality questions

Pendal Group described a FY26 result largely in line with expectations, favourably received given positioning and how negative expectations had become, sending the stock up 11.4 percent. Revenue came in 1 percent light, and Pendal flagged some quality issues, including costs taken below the line, a low tax rate, higher capitalisation and weak cash flow, though the broad trends across the business, including moderating growth in Australia offset by continued international momentum, are expected to remain consistent.

What fund managers say they are watching next is whether the absence of AI disruption to online marketplaces, cited by Yarra, continues to hold, growth at Trader Interactive as the US economy strengthens, the earnings re-acceleration Wilson Asset Management wants to see before adding further, and resolution of the cash flow and cost quality issues flagged in the August result.