The rapid proliferation of generative AI once fueled fears that the human resources industry would be completely upended. Yet the latest stock price movements and earnings data tell a different story: rather than eliminating demand for recruiting services, AI has paradoxically driven up the value of professional screening as AI-generated resumes flood the market, powering a strong rebound in US staffing stocks from this year’s lows.
Year to date, ManpowerGroup (MAN.US) and Robert Half (RHI.US) have rallied approximately 94% and 120% from their February and March lows, respectively. Those troughs coincided with a wave of “SaaS doom” panic selling triggered by the rapid adoption of AI tools. With second-quarter results beating expectations and hiring demand showing signs of improvement, investors are now reassessing the actual impact of AI on the staffing industry.
The rebound has not been confined to the two industry leaders. An index tracking professional services companies has climbed 44% since April; online job platform ZipRecruiter (ZIP.US) has surged nearly 183% from its March low; and the US depositary receipts of Recruit Holdings—which owns Indeed and Glassdoor—have soared roughly 170% from their trough.
AI Resume Flood: Screening Value Rises, Not Falls
The market’s original concern was straightforward: generative AI could automate resume screening, job description writing, and even interviewing, ultimately eroding the raison d’être of staffing firms. The reality, however, has unfolded in the opposite direction.
AI tools have dramatically lowered the cost of submitting job applications. The challenge employers now face is no longer “not enough resumes” but “too many resumes.” With a deluge of AI-generated applications pouring in, identifying genuinely suitable candidates from a sea of applicants has become a new pain point.
William Blair analyst Trevor Romeo points out that the rising volume of AI-generated applications may make companies more reliant on professional recruiters for resume screening and candidate vetting. In other words, AI has lowered the cost of “applying” while raising the value of “screening.” The relationship between AI and staffing firms is not necessarily a simple substitution.
Earnings Validate Recovery, Analysts Shift Stance
The most critical catalyst behind the staffing stock rally remains tangible earnings performance.
ManpowerGroup posted its highest quarterly operating profit in three years in the second quarter, while Robert Half also beat market expectations and signaled a positive demand outlook. The improved results have convinced investors that the staffing industry may be entering a cyclical recovery.
BMO Capital Markets analyst Jeff Silber said bluntly that the market “threw the baby out with the bathwater” earlier this year amid the “SaaS doom” panic. In a recent note, he wrote that staffing stocks tend to outperform in the early stages of an HR industry recovery, and the sector is currently in that recovery phase, with most industry indicators having returned to growth.
UBS analyst Joshua Chan also acknowledged that real data is shifting his previously pessimistic view on AI disruption in the staffing industry. Before ManpowerGroup’s earnings release, he had been reluctant to recommend staffing stocks due to investor concerns about AI. Barclays analyst Manav Patnaik stated unequivocally that the latest results from both companies demonstrate that the staffing industry recovery is “unquestionably underway.”
AI as an Efficiency Tool, M&A News Adds Fuel
Beyond structural changes on the demand side, staffing firms themselves are actively leveraging AI to improve operational efficiency.
Bloomberg Intelligence analyst Stuart Gordon noted that HR companies can use AI to enhance productivity. ManpowerGroup has already applied AI to interview assistance processes, suggesting that AI need not be merely a competitor to traditional recruiting businesses—it could also become a tool for reducing operating costs and improving talent-matching efficiency.
UBS’s Joshua Chan believes that as long as the staffing industry can sustain growth—even if that growth is primarily cyclical—market concerns about AI disruption may gradually fade over time. The focus of the discussion has shifted from “will AI replace staffing firms” to “can staffing firms use AI to become more efficient recruiters.”
Additionally, private equity firm Silver Lake is reportedly in talks to acquire HR software maker Workday (WDAY.US), sending Workday shares higher on the news. This signals that investor interest in the sector is warming up again, a stark contrast to the mass exodus just months ago.
Valuation Pressures Emerge, the Real Test Lies Ahead
The surge in staffing stocks does not mean risks have disappeared.
According to data compiled by Bloomberg, ManpowerGroup’s share price is now just 1.5% below the average analyst price target, while Robert Half has already exceeded its average target by more than 20%. After this rapid repricing, valuation pressures have re-emerged for select names.
A bigger wildcard remains the US labor market. US employers unexpectedly shed jobs in July, and employment figures for the prior two months were revised downward, suggesting the labor market may be weaker than previously thought.
Moreover, despite the recent recovery in professional services stocks, share prices remain well below their early-2022 peaks—a period that preceded the softening of the US labor market amid the highest inflation in a decade and rising interest rates.
This staffing stock rally is, at its core, a correction of the market narrative: AI has not eliminated demand for recruiting services; if anything, the proliferation of AI-generated content has made “screening, judgment, and matching” more important than ever. But whether this rebound can evolve into a sustained long-term rally ultimately depends on two variables—whether the US labor market can genuinely recover, and whether staffing firms can prove they are beneficiaries of the AI wave rather than casualties of it.