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THE MONEY IDEA💡
4 Stocks Built to Withstand AI Volatility
Welcome, we are {{active_subscriber_count}} Money Masters and counting!
The market is being pulled in two directions right now.
Investors are still watching oil, inflation, and the Fed, but they are also trying to figure out which companies can actually defend themselves as AI changes the competitive environment.
That is making the market more selective.
Some stocks tied to AI spending are still attracting attention, but a different opportunity is opening in businesses whose moats may prove more durable than expected.
When the market begins questioning entire sectors, strong companies with resilient advantages can slip into undervalued territory without their long term thesis actually breaking.
Market Mood: Selective Resilience 🛡️
Conviction Level: ●●●○○ (3/5)
The market still looks fairly valued overall, but a handful of wide moat businesses appear mispriced as investors reassess the long term winners and losers from AI.
We’ve opened the Money Masters Community for readers who want to think beyond weekly market moves and sharpen long term investing judgment.
It’s a focused space for disciplined investors who value clarity over noise.
Now let’s dive in↓
Here are five undervalued companies Morningstar believes are still built to defend their competitive advantages even as AI reshapes major parts of the market.
THE MONEY IDEA💡
4 Stocks Built to Withstand AI Volatility
Bottom Line: S&P Global stands out as a high quality compounder because its ratings, indices, and data businesses remain deeply embedded in financial markets and hard to replace.
Ratings Franchise: Investors rely on S&P ratings to compare credit risk across bonds and sectors, which reinforces its role as a trusted standard in fixed income.
Index Power: Its indices are used widely across markets, products, and benchmarks, making them more valuable as more institutions and funds continue relying on them.
Regulatory Barrier: Formal recognition, documentation rules, and institutional habits make it extremely difficult for new competitors to dislodge established rating and index providers.
Proprietary Data: In an AI world filled with public information, unique financial datasets become more valuable because differentiated inputs can support better analysis and decision making.
Valuation Gap: Shares trade about 25% below Morningstar’s fair value estimate, which looks compelling for a business with wide moat characteristics and durable demand.
Do This Next: Treat S&P Global as a core long term holding and let time work in your favor, especially while buybacks can add more value at current prices.
Bottom Line: ICE offers lower uncertainty than most growth names, and its exchange infrastructure, data assets, and entrenched market position create a steady long term investment case.
Exchange Leadership: ICE operates critical futures markets, especially in energy, where liquidity tends to attract more liquidity and strengthen the dominance of the incumbent platform.
Network Effect: The more traders, hedgers, and institutions use ICE contracts, the harder it becomes for competitors to replicate that same market depth.
Clearing Confidence: Its clearing systems help ensure trades settle properly, which gives participants confidence and creates another major barrier to competitive disruption.
Data Strength: Exchange pricing data and information tied to the New York Stock Exchange ecosystem remain proprietary and strategically useful in a data hungry environment.
Valuation Gap: Shares trade about 10% below Morningstar’s fair value estimate, which still matters when paired with a low uncertainty business and wide moat profile.
Do This Next: Consider ICE as a steady portfolio anchor if you want long term quality and resilience without relying on aggressive assumptions around future growth.
Bottom Line: Datadog carries more uncertainty than other names on this list, but its mission critical role in cloud infrastructure supports a stronger moat than many assume.
Mission Critical Role: Customers depend on Datadog to monitor application performance, system reliability, and operational health, making the platform central to modern software workflows.
Switching Costs: Replacing Datadog is not easy because customers build custom integrations and internal processes around the platform’s data, alerts, and observability tools.
Cloud Neutrality: Its ability to work across multiple cloud environments gives Datadog flexibility and helps protect it from being too dependent on one ecosystem.
AI Customer Exposure: Adoption among many leading AI native companies suggests the platform remains highly relevant as software development and infrastructure continue evolving.
Valuation Gap: Shares trade about 23% below Morningstar’s fair value estimate, offering upside if the market becomes more confident in its long term durability.
Do This Next: Keep position sizes measured, but consider starting or adding slowly if you want selective software exposure with meaningful upside from better sentiment.
Bottom Line: Tyler looks compelling because its software supports essential government operations, customer retention remains extremely high, and the broader software selloff has created a discount.
Government Stickiness: Public agencies rarely switch vendors because Tyler’s systems are tied to budgeting, courts, records, payments, and other core government functions.
Specialized Expertise: Tyler understands public sector workflows and compliance requirements in a way that more general software companies often cannot easily replicate.
Retention Strength: A retention rate near 98% shows that once a government customer adopts the software, the relationship tends to remain in place for years.
Procurement Barrier: Slow purchasing cycles, regulation, and implementation complexity all favor incumbents, which helps protect Tyler from rapid competitive disruption.
Valuation Gap: Shares trade about 30% below Morningstar’s fair value estimate, even though Morningstar still expects strong earnings growth over the next several years.
Do This Next: Buy steadily and stay patient, because this type of business often rerates only after investors regain confidence in the broader software sector.
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Quick Money: The better setup this week is not chasing whatever sounds most connected to AI, but owning durable businesses the market may be underestimating.
$SPGI ( ▲ 0.16% ) Treat as a core holding with resilient competitive advantages and durable cash generation.
$ICE ( ▼ 0.19% ) Consider for stability and steady compounding in a more uncertain macro environment.
$DDOG ( ▼ 3.55% ) Size carefully, but keep it on your list for selective software exposure.
$TYL ( ▼ 1.5% ) Build a position over time as a sticky niche software business trading below intrinsic value.
If you’re looking for more smart, actionable ideas beyond this week’s picks, we’ve gathered a short list of other high-quality newsletters worth your time.
See our curated picks here — practical insights on money, work, and life from trusted sources.
Optional Deep Dive
For those looking for a longer-term framework to navigate pullbacks, rate cycles, and uncertainty, The Money Path breaks down the process step by step.
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