andresr It is not the strongest of the species that survives, not the most intelligent that survives. It is the one that is the most adaptable to change. - Charles Darwin While there is some debate about whether the quote above was really from Charles Darwin or just a paraphrase of his ideas, there is a lot of truth to the value of adaptability.
Perhaps no other economist explained the value of "waves of creative destruction" better than Joseph Schumpeter, which gives companies a significant incentive to disrupt themselves before a competitor does, and for this, continuous innovation is a must. Right now one of the biggest disruption risks for many companies, including Omnicom ( NYSE: OMC ), is being delivered by generative AI. Fortune recently reported there has been a massive increase in GenAI discussions during earnings calls with managements expecting a massive technological shift.
Omnicom is among those companies talking about generative AI, as it is clear it will have an oversized impact on its industry. The company is taking a positive view, seeing the technology providing more benefits than risk of substitution, but we are not fully convinced. In any case, we are going to update our thesis with the most recent financial results and Omnicom's GenAI strategy.
We last wrote about the company a little over a year ago, downgrading it to a "Hold" rating, as we saw shares fully valued. It appears to have been the right call, as shares have delivered a total return of only ab.