Analysts argue Moody’s ratings business remains resilient due to entrenched market structures, offsetting AI-related risks.
Moody’s Corporation (MCO) shares traded at $455.77 on May 1, with trailing and forward P/E ratios of 32.70 and 27.47, respectively. A recent bullish thesis highlights the firm’s ratings division as a long-term investment opportunity, despite short-term stock weakness tied to AI disruption fears.
The argument centers on Moody’s Investors Service (MIS), whose competitive moat is deemed largely immune to AI. While AI may replicate analytical functions like default probability assessments, the value of Moody’s ratings stems from century-old market conventions, regulatory frameworks, and investment mandates. Rated bonds historically enjoy lower borrowing costs, reinforcing demand.
Market structures create a self-sustaining ecosystem where issuers and investors have little incentive to deviate from established ratings, ensuring continued relevance for Moody’s core business.