Moody’s Corporation (NYSE:MCO) experienced a decline in its stock value during the third quarter of 2025, attributed to increasing competition in the artificial intelligence (AI) sector. The firm’s shares closed at $490.09 on October 8, 2025, reflecting a 3.16% decline over the month and a 3.60% increase over the past year. The company’s market capitalization stands at $87.902 billion.
The downturn for Moody’s coincides with a strong performance in the broader U.S. equity market, driven by optimism regarding the Federal Reserve’s more accommodative monetary policies and a surge in technology stocks. The S&P 500® Index and the Nasdaq Composite both enjoyed significant gains, illustrating the ongoing momentum in the tech sector. The Mar Vista U.S. Quality Premier Strategy reported a return of 6.41% net of fees for the same period, although this lagged behind the 8.00% return of the Russell 1000 Index and the 8.12% return of the S&P 500 Index.
In its third-quarter investor letter, Mar Vista Investment Partners highlighted concerns surrounding Moody’s amid a competitive landscape in AI. According to a report from FactSet, the company faces pressure on profit margins due to heightened competition from startups, new entrants, and established players in the industry. The letter noted that while Moody’s Analytics has been proactive in deploying advanced AI models, the increasing competitive dynamics could challenge its market position.
The investor letter stated, “Moody’s Corporation (NYSE:MCO) stock declined for the quarter on concerns of a growing AI arms race among competitors.” It emphasized that the company’s strategy focuses on expanding its ecosystem, allowing clients to integrate Moody’s data and AI tools into their workflows. The expectation is that these investments will further embed Moody’s services within the operations of banks, insurance firms, and asset managers, thereby strengthening the company’s economic moat.
Despite these challenges, Moody’s remains a component of many hedge fund portfolios, with 82 funds reporting holdings as of the end of the second quarter of 2025, unchanged from the previous quarter. While Mar Vista acknowledges the potential of Moody’s as an investment, it expresses a preference for other AI stocks that may offer higher returns in a shorter timeframe.
As the AI landscape continues to evolve, investors are keenly observing which companies will emerge as leaders. The discussion around Moody’s highlights the importance of competitive positioning in technology sectors, particularly as firms strive to leverage AI for growth.
For further insights into investment strategies and market trends, readers can explore additional resources provided by Mar Vista and consider reports on other potentially lucrative AI investments.
This article originally appeared on Insider Monkey and is part of ongoing coverage of market developments and investment insights.