Goldman Sachs Names CoStar Group Top AI Productivity Beneficiary

Goldman Sachs has identified CoStar Group as the top AI productivity beneficiary among Russell 1000 companies, citing its high labor costs relative to sales and significant exposure of wage bills to AI automation. The company's wage bill faces a 37% risk of being replaced by AI, while labor costs account for 31% of sales, ranking it in the 97th percentile compared to industry peers.

CoStar has already started leveraging AI across its operations, launching CoStar Rent Benchmark, a tool built from four million abstracted lease agreements. The company's Apartments.com also recorded over 500,000 AI sessions within weeks of release, with users spending nearly three times longer per session and viewing twice as many listings.

Despite facing investor concerns about AI eroding its data moat, CoStar's stock has fallen significantly in the past year, plummeting 63.8% over the past 52 weeks. However, Goldman Sachs believes the company is undervalued, trading at a lower price-to-earnings multiple than the industry average.

CoStar's recent Q2 earnings report showed revenue climbing 18.4% year-over-year to $925 million, with adjusted EBITDA more than doubling to $184 million and an impressive 20% adjusted EBITDA margin. The company also managed to keep operating cost growth to just 2% year-over-year while continuing to invest in long-term growth initiatives.