CAR Group Ltd (ASX: CAR) and REA Group Ltd (ASX: REA) shares are trading at historically low levels. Some of this underperformance has been attributed to fears of long-term threat posed by AI-driven competition.
So much discourse surrounding the AI boom has been focussed on identifying stocks set to benefit from technological innovation and integration.
However there is also the possibility that some businesses' core products are challenged by AI tools.
This fear may be contributing to why CAR Group Shares and REA Group shares are both trading close to 52 week lows.
On one hand, investors may say these stocks look increasingly attractive from a valuation perspective.
However there are serious questions about the threat of AI, along with other concerns that have influenced this underperformance.
A new report from Canaccord Genuity/Wilsons Advisory has shed light on what may be influencing investor sentiment.
The report also identified key areas of focus that could influence investor decisions during and after February's reporting season.
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AI and competitive risks
Greg Burke, Equity Strategist said these two ASX 200 stocks will be of particular interest this reporting season following a period of material underperformance, driven by several ongoing investor debates that are likely to dominate earnings calls.
Mr Burke said investors are questioning the potential long-term threat posed by AI-driven competition.
Management teams are likely to address these concerns directly, while also highlighting the material revenue and cost opportunities associated with internal AI adoption, and reiterating the strength of their respective data moats and product offerings.
For REA Group, the report said the key debate regarding competition centres on the extent to which Domain, now owned by CoStar, and Google (which is reportedly exploring a real estate platform), could threaten REA's leading market position and, over time, erode pricing power and margins.
Interest rates and cyclical concerns
The report also noted that the growing prospect of further RBA rate hikes presents a potential headwind for automotive and real estate listings domestically.
This increases the importance of yield and depth growth to support revenue and earnings over the near term.
We expect both REA and CAR to deliver strong outcomes on this front in FY26.
The report also said softness in the US RV market has been a key focus for Car Group investors.
We expect CAR to point to further signs of improvement in the US RV market, consistent with broadly supportive US macro conditions, including the prospect of multiple interest rate cuts by the Fed this year.
Are either of these stocks a buy?
Some of these questions may be answered by management in February's upcoming reporting season.
REA Group said it will announce its results for the half-year ended 31 December 2025 on Friday, 6 February 2026.
Meanwhile, CAR Group will announce its results for the half year ended 31 December 2025 on Monday 9 February 2026.
Mr Burke said with sector debates weighing on sentiment, REA and CAR look increasingly attractive from a valuation perspective.
They trade on forward P/Es of 25x and 36x, which is ~20% below their five-year averages, while offering above-market, mid-teens EPS growth over the medium term. With these discounts, both stocks appear well positioned for relief rallies if their management teams can ease investor concerns or deliver upgrades to consensus.
