The time to look at buying stocks is when investors are fearful. And they’re certainly wary of shares in people-focused service businesses at the moment.
Shares in Accenture fell around 18% last week after some concerning results. But that’s not the name I have in mind right now.
What happened with Accenture?
Accenture is a consulting business. But investors are wary that artificial intelligence (AI) might be about to replace the need for humans.
It’s a fair enough worry. Management is trying to present AI as an opportunity instead of a threat, but the latest results don’t really back this up.
A 2% decline in new bookings has investors asking the same question. If AI can do the work, why pay for the people?
The question is pretty reasonable and I don’t know what the answer is for Accenture. But not every service business is the same.
Not all businesses are the same
Brown & Brown (NYSE:BRO) is the stock I own in this space. And I like the risk profile much better in terms of AI threat.
It’s not just about knowing which carriers underwrite which risks. The firm’s scale is also a huge advantage.
Brown & Brown adds value for both sides of the transaction. For clients, it offers negotiating power that helps attract better prices.
For carriers, it brings meaningful volumes that can be extremely valuable. And the ability to do this isn’t something that can easily be replicated by AI.
Why is the stock down?
Despite this, the stock is 45% off its highs. And one part of the reason for this is what happened last Christmas.
In December 2025, around 275 employees resigned simultaneously to join Howden – a UK-based rival. That had a big impact on revenues – around $23m a year.
What strikes me, however, is what the episode reveals. In insurance broking, the clients follow the people – in other words, relationships and individuals matter.
That’s something that can’t be emulated by AI. And that’s why Brown & Brown shares are on my buy list at some unusually low valuation multiples.
Outlook
Brown & Brown’s sales growth has stalled due to the Howden issue. But the affected quarters are now largely in the rearview mirror.
Organic sales growth was flat in Q1, meaning the firm largely offset the lost revenues. And the picture should be a bit clearer from this point on.
The biggest concern is the macroeconomic environment in the US. Pressure on the lower end of the economy could weigh on renewal rates and premium volumes.
That’s a real challenge. But a tough environment across the industry could also create some acquisition opportunities.
Buying
Brown & Brown is a serial acquirer of businesses. And – much like the stock market – difficult times can create opportunities.
With over $1bn in operating cash flows, the firm is in a decent position to buy. It’s the fastest way for the firm to grow its revenues and profits – if it can do deals at the right prices.
My own view is that the stock itself looks pretty attractive at around $59 a share. A 45% decline suggests the market is pricing in long-term disruption.
I can see that for some service industries, but not this one. So I’m looking to keep buying the stock at today’s prices.
Should you invest £5,000 in Brown & Brown right now?
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Stephen Wright owns shares in Brown & Brown.
