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Is MCO a good stock to buy? We came across a bullish thesis on Moody’s Corporation on Valueinvestorsclub.com by Wrangler. In this article, we will summarize the bulls’ thesis on MCO. Moody’s Corporation's share was trading at $455.77 as of May 1st. MCO’s trailing and forward P/E were 32.70 and 27.47 respectively according to Yahoo Finance.

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Moody's Corporation, together with its subsidiaries, operates as an integrated risk assessment firm in the United States and internationally. MCO is presented as a compelling long-term investment opportunity despite recent stock weakness driven by concerns around AI disruption. The core thesis centers on Moody’s Investors Service (MIS), the ratings business, whose moat is argued to be largely immune to AI. While AI may replicate analytical functions such as default probability assessment, the value of Moody’s ratings lies not in analytical superiority but in deeply entrenched market structures built over a century.

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Ratings are embedded across investment mandates, regulatory frameworks, and market conventions, creating a self-reinforcing ecosystem where issuers and investors alike have no incentive to deviate. Empirical evidence ցույց that rated bonds enjoy materially lower borrowing costs versus unrated equivalents, far exceeding the cost of obtaining ratings, ensuring continued demand.

This dynamic renders disruption highly unlikely, even in a world of advanced AI tools, while positioning Moody’s to benefit from AI-driven cost efficiencies. At approximately $420 per share, Moody’s trades near 28x 2026 earnings, representing one of its more attractive entry points historically.

MIS alone is estimated to generate a 2.7% unlevered earnings yield with 7–10% long-term revenue growth driven by issuance and pricing, supporting an 11–14% IRR even assuming Moody’s Analytics (MA) is worth zero. While MA contributes meaningful recurring revenue with solid margins, uncertainty around AI impact makes it conservatively excluded from the valuation. Overall, Moody’s offers durable growth, pricing power, and significant downside protection, with upside driven by compounding in its highly predictable ratings franchise.

Previously, we covered a bullish thesis on Moody’s Corporation (MCO) by Business Model Mastery in February 2025, which highlighted the company’s dominant ratings franchise, high-margin recurring revenue model, and growth driven by Moody’s Investors Service and analytics expansion. MCO’s stock price has depreciated by approximately 12.22% since our coverage. Wrangler shares a similar view but emphasizes on AI resilience and MIS-driven IRR potential.

Moody’s Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 91 hedge fund portfolios held MCO at the end of the fourth quarter which was 87 in the previous quarter. While we acknowledge the risk and potential of MCO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MCO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.