U.S. Human Resource Stocks Strongly Rebound: AI Resume Boom Makes Recruitment Companies Even More Valuable!

AI has not “ended” the recruitment industry as the market once feared; on the contrary, it may be creating new demand for HR companies.

Since the beginning of this year, ManpowerGroup and Robert Half have rebounded by about 94% and 120% from their lows in February and March, respectively. Those lows coincided with a “SaaS doomsday” panic in the market as AI tools spread rapidly. As both companies posted better-than-expected Q2 results and recruitment demand improved, the market has begun to reassess AI’s impact on the recruitment sector.

This rebound is not limited to just these two companies. An index tracking professional services firms is up 44% since April. ZipRecruiter has climbed nearly 183% from its March low, while Recruit Holdings’ American Depositary Receipts are up about 170% from their low point.

The “glut” of AI-generated resumes boosts the value of screening

Previously, the market worried that generative AI could automatically screen resumes, write job postings, or even participate in interviews, ultimately eroding recruitment firms’ value.

But reality may be heading in the opposite direction.

As AI tools lower the barriers for job applications, companies may soon find themselves facing not “too few resumes” but rather “too many resumes”. With a flood of AI-generated applications, identifying the truly suitable candidates from a sea of applicants has become a new challenge.

William Blair analyst Trevor Romeo believes that the growth in AI-generated applications may actually make companies more reliant on professional recruiters for resume screening and candidate filtering. In other words, while AI reduces the cost of “applying,” it may increase the value of “screening.”

This also means the relationship between AI and recruitment firms isn’t simply one of substitution.

Performance speaks first: the AI-skeptic narrative is shifting

The key catalyst behind the rebound in recruitment stocks remains their performance.

ManpowerGroup posted its best quarterly revenue in three years for Q2, while Robert Half also beat market expectations and offered a positive outlook on demand. Improved financial results have convinced investors that the recruitment industry may be on the verge of a cyclical recovery.

BMO Capital Markets analyst Jeff Silber noted that, earlier this year, the market was “throwing the baby out with the bathwater” amid the “SaaS doomsday” panic.

UBS analyst Joshua Chan also pointed out that real data is overturning previous pessimism about AI disrupting recruiting. Before ManpowerGroup released its results, Chan had been reluctant to recommend recruitment stocks due to investor concerns around AI.

Barclays analyst Manav Patnaik said the latest results from both companies show that recovery in the recruitment industry has “undoubtedly begun.”

AI may also serve as a recruitment “efficiency tool”

Beyond changing demand, recruitment firms are also leveraging AI to boost efficiency.

Bloomberg Intelligence analyst Stuart Gordon noted that HR companies can use AI to improve productivity. ManpowerGroup has already integrated AI into the interview assistance process, showing that AI is not just a competitor to traditional recruiting, but can also help reduce operating costs and improve matching efficiency.

UBS’s Joshua Chan believes that as long as the recruitment industry continues to grow, even if mainly due to cyclical recovery, the market’s worries about AI disruption will likely fade over time.

In other words, the debate is no longer just about “will AI replace recruitment companies,” but rather: can recruitment firms use AI to make themselves more efficient?

After a strong rebound, the real test begins

Of course, the surge in recruitment stocks doesn’t mean risks have disappeared.

According to data compiled by Bloomberg, ManpowerGroup’s share price is now only 1.5% below the average analyst target, while Robert Half is more than 20% above the average target. After this wave of rapid recovery, valuation pressure is re-emerging for some stocks.

The bigger variable still lies within the US job market. US employers unexpectedly cut jobs in July, and job growth figures for the previous two months were revised downward, suggesting the labor market may be weaker than previously thought.

So, this rebound in recruitment stocks is more about correcting the market narrative: AI has not eliminated demand for recruitment — on the contrary, the flood of AI-generated content may make “screening, judging, and matching” even more critical.

But whether this rebound can evolve into a lasting bull run still depends on two variables — whether the US labor market truly recovers, and whether recruitment companies can prove they can benefit from the AI wave rather than be replaced by it.