Allianz Bets on AI to Drive Profitability as Stock Trades Near Record High

Allianz shares near 52-week high as record Q1 profit and AI cost cuts offset CIO's bubble warning. Analysts with €413.90 target; RSI at 70 suggests overbought.

The Allianz share closed at €407.30 on Friday, a whisker below its fresh 52-week high of €408.80, as investors digested a curious juxtaposition: a record operating profit and a cautiously worded bubble warning from the insurer's own chief investment strategist.

Ludovic Subran, Allianz's CIO, told the FT Global Insurance Summit that markets have entered "bubble territory," pointing to SpaceX as a case study. The company completed its IPO in early June at roughly $86 billion, then promptly returned to investors for $25 billion in bonds — and was met with orders of nearly $90 billion. For Subran, that signals companies are exploiting elevated equity prices and cheap credit to hoard capital at a pace that echoes the excesses of previous bubbles.

Yet the numbers flowing out of Allianz's own operations tell a different story. First-quarter operating profit hit a record €4.52 billion, up 6.6% year-on-year. PIMCO attracted €37.6 billion in third-party net inflows. The company confirmed its full-year target of €17.4 billion in operating profit, plus or minus €1 billion, and is already €1.3 billion through a €2.5 billion share buyback programme scheduled to run until December 2026.

Digital Transformation Cuts Service Costs by More Than Half

Underneath those headline figures, a structural shift is gathering pace. At an investor day in Munich, management laid out detailed plans to embed artificial intelligence across the entire value chain — from pricing and marketing to claims processing — by 2027. The use of voice agents and digital self-service portals is expected to become standard.

The results are already measurable. The service cost per policy has fallen from €12 in 2021 to just €5.30 in the most recent quarter — a reduction of more than 50%. That efficiency gain is most visible in Allianz Direct, the company's direct-to-consumer unit, which reported 3.2 million retail clients in the first quarter. Its business volume reached roughly €1.5 billion in 2025, while operating profit hit €75 million and the combined ratio improved to 95.5%. Allianz Direct now ranks among the top three in new business in key European markets.

The stock market has rewarded the strategy. Shares have gained over 19% in the past twelve months. But a technical warning flag has appeared: the relative strength index (RSI) currently sits at 70, a level that typically signals short-term overbought conditions.

Analyst Consensus Remains Bullish but Cautious

The average analyst price target for Allianz stands at €413.90, with nine buy recommendations against just two sells. RBC Capital Markets maintained its "Sector Perform" rating and €400 target after the first-quarter numbers, though it raised its longer-term profit forecasts, citing strong momentum in property and casualty insurance as well as asset management.

The company's next major test comes on August 7, 2026, when it reports second-quarter earnings. That will give investors a chance to assess whether the efficiency gains from artificial intelligence are flowing through to the broader group — and whether the stock's valuation can justify its position a hairbreadth from a record high.