Moody's (MCO) Fell on Increasing Competition in the AI Sector

Mar Vista Investment Partners, LLC, an investment management company, released its “Mar Vista U.S. Quality Premier Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The third quarter was a standout period for US equities, led by optimism over the Federal Reserve’s dovish pivot and the ongoing boom in artificial intelligence (AI). The S&P 500® Index and the Nasdaq Composite surged, representing technology’s relentless momentum.  In the quarter, the strategy returned +6.41% net of fees, compared to +8.00% and +8.12% returns for the Russell 1000 Index and the S&P 500 Index, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Mar Vista U.S. Quality Premier Strategy highlighted stocks such as Moody’s Corporation (NYSE:MCO). Moody’s Corporation (NYSE:MCO) is a leading integrated risk assessment firm. The one-month return of Moody’s Corporation (NYSE:MCO) was -3.16%, and its shares gained 3.60% of their value over the last 52 weeks. On October 8, 2025, Moody’s Corporation (NYSE:MCO) stock closed at $490.09 per share, with a market capitalization of $87.902 billion.

Mar Vista U.S. Quality Premier Strategy stated the following regarding Moody’s Corporation (NYSE:MCO) in its third quarter 2025 investor letter:

"Moody’s Corporation (NYSE:MCO) stock declined for the quarter on concerns of a growing AI arms race among competitors. In mid-September, FactSet reported slowing growth and commented that increasing competitive dynamics from start-ups, new competitors, and traditional competitors may pressure margins. Moody’s Analytics segment has been early and aggressive in rolling out agentic artificial intelligence models. Their strategy aims to expand the company’s ecosystem where customers can leverage Moody's data, analytics, and AI tools within their own workflows. We expect Moody’s AI investments will further imbed its services into the operations of banks, insurance companies, and asset managers, further expanding the company’s economic moat."

Moody’s Corporation (NYSE:MCO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 82 hedge fund portfolios held Moody’s Corporation (NYSE:MCO) at the end of the second quarter, the same as in the previous quarter. While we acknowledge the potential of Moody’s Corporation (NYSE:MCO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Moody’s Corporation (NYSE:MCO) and shared the list of most profitable dividend stocks to invest in. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.