AI Fears About This Stock Are Overblown

Traditional ad agencies like Omnicom have been sapped by artificial intelligence fears. In fact, the stock is down more than 20% from its late 2024 highs. While AI-powered tools may hurt pricing power for creative and production services, the core of the agency’s business now revolves around omnichannel marketing planning and managing data assets, which we believe will play an increasingly important role in a complex and fragmented ad ecosystem. With the IPG merger closed, we expect Omnicom to outperform other agencies thanks to its trainable data assets that can improve targeting and conversion efficiency. At today’s prices, the stock is a promising investment for patient investors, trading 33% below our $115 fair value estimate. This undervalued stock is one of Morningstar Chief US Market Strategist Dave Sekera’s stock picks from The Morning Filter podcast episode 5 Stocks to Buy in January 2026.

After the November 2025 acquisition of IPG, Omnicom is the largest traditional advertising holding company. It provides creative, media planning and buying, and reputation management services to brand owners. The transition from traditional media advertising, such as newspapers and linear television, to digital advertising, including social media, has created an opportunity for agencies to differentiate with scale and data. Over the past 20 years, the pace of digital advertising growth has far outpaced that of traditional media. Digital ad spending as a percentage of total ad spending increased from 40% in 2016 to 70% in 2024. To add value for clients, agencies need to incorporate data analytics offerings to compete in a larger, more fragmented, and complex ad market.

Key Morningstar Metrics for Omnicom

• Fair Value Estimate: $115
• Star Rating: 4 Stars
• Economic Moat Rating: Narrow
• Uncertainty Rating: High

Economic Moat Rating

We believe that Omnicom has a narrow moat attributable to intangible assets. The largest and most storied agencies have decades of granular data on omnichannel and global marketing campaign performance, reinforced by their strong reputations. The advertising landscape has become increasingly fragmented as new technologies and media formats have emerged. The rise of search and social media advertising has resulted in a more widely distributed audience that allocates time across various channels that offer engaging content. This can overwhelm individual brands. Omnicom can create value by navigating this complex landscape and taking responsibility for creative development, brand management, and media buying decisions across the entire advertising supply chain.

Read more about Omnicom’s moat rating.

Fair Value Estimate for Omnicom Stock

Our $115 fair value estimate implies an enterprise value equal to 9.3 times our 2025 adjusted EBITDA estimate. With the IPG deal closed, we see opportunities for revenue synergies, but they will take time to emerge. We also believe there are cost synergies from eliminating redundant back-office roles, although we are more conservative than management’s $750 million per year in cost savings. The main drivers of revenue are economic growth, client wins and losses, and the shift toward digital advertising. Our probability-weighted forecast of potential outcomes translates to a 2% five-year compound annual growth rate for revenue. The largest cost item for Omnicom is salary and service, which encompasses costs for staffing, freelancing, vendors, and client-related travel. This line item has averaged approximately 73% of revenue over the past five years, and we expect that to hold steady throughout our projection period.

Read more about Omnicom’s fair value estimate.

Risk and Uncertainty

One of the largest risks to an agency is the potential for brands to take creative and media planning in-house. With the emergence of technologies that can produce AI-generated advertisements at a fraction of the cost of human production, brands may feel emboldened to cut agency creative costs. We also think the acquisition of IPG carries integration risks that leave the combined entity susceptible to talent loss. Additionally, agencies are highly exposed to economic cycles. Approximately 85% of Omnicom’s revenue comes from North America and Europe, so a dip in economic growth in these regions would hurt the agency.

Read more about Omnicom’s risk and uncertainty.

Omnicom Bulls Say

• With the IPG acquisition, Omnicom holds a deep database of Acxiom-derived identity graphs, which should enhance its ability to place highly targeted advertisements.
• Omnicom has a highly integrated media planning and creative offering in the Omni operating system. This tight integration should prove especially useful amid growth in personalized ads.
• An increasingly fragmented advertising landscape increases clients’ reliance on advertising agencies to manage global omnichannel campaigns.

Omnicom Bears Say

• Omnicom will likely take years to fully leverage the capabilities of its newly acquired identity graph. Publicis’ Epsilon identity graph remains the leader.
• We expect exponential growth of AI-powered personalized ads, which will compress pricing power for human-powered creative and production offerings.
• Omnicom’s organic growth has the highest sensitivity to regional economic growth compared with other traditional agencies, leaving it highly vulnerable to a downturn.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Jan. 13, 2026, close unless otherwise noted.