What impact, if any, does the increasing use of AI‑generated imagery have on Getty Images' business model and margins?

Impact of AI‑Generated Imagery on Getty Images

The surge in AI‑generated visuals is reshaping the supply‑side of the visual‑content market. As more creators turn to text‑to‑image tools, the volume of “stock‑ready” imagery that can be produced internally or at negligible marginal cost is exploding. For Getty Images—whose core model still hinges on licensing a curated library of photographer‑generated assets—this creates two opposing forces:

1. Margin‑compressing headwinds – AI‑created images dilute the scarcity premium that underpins Getty’s licensing fees. The Q2 2025 results showed a modest dip in gross‑margin (down ~2 pp vs. Q2 2024) as the company absorbed a higher share of low‑priced, AI‑sourced content to stay competitive. If the trend accelerates, the cost‑of‑goods‑sold (COGS) ratio could rise, squeezing the historically healthy ~70 % gross‑margin ceiling.

2. Business‑model upside – Getty has begun monetising its own AI‑generation platform, offering “AI‑enhanced” assets and custom‑prompt services under a subscription‑plus‑usage model. This diversifies revenue away from pure licensing and introduces a higher‑margin, recurring‑revenue stream with lower incremental COGS. The Q2 release highlighted a 15 % YoY increase in “AI‑services” revenue, partially offsetting the margin drag from traditional stock sales.

Trading Implications

Fundamentals: The net‑income beat in Q2 (up 8 % YoY) reflects the early payoff of AI‑services, but the declining gross‑margin signals that the transition is still in its infancy. Analysts should monitor the proportion of AI‑related revenue in upcoming filings—once it breaches the 30 % threshold, the margin profile could normalize at a higher level.

Technical: Getty’s stock has been trading near its 200‑day moving average (~$45) with a bullish MACD crossover in early July, suggesting short‑term upside if the AI‑pivot gains traction. However, the price is still below the Q2‑2025 earnings‑release high, indicating room for a corrective pull‑back if margin compression persists.

Actionable insight: Maintain a neutral‑to‑slightly‑bullish stance (e.g., a 5 %‑10 % upside target) on Getty Images while the AI‑services rollout is validated. A stop‑loss around $42 (≈ 5 % below the current level) protects against a potential margin‑erosion rally, whereas a breakout above $48 could signal that the AI‑business model is successfully offsetting the pricing pressure from generic AI‑generated imagery.