On My Mind
Apollo’s Torsten Slok recently wrote on AI:
“After three years with ChatGPT and still no signs of AI in the incoming data, it looks like AI will likely be labor enhancing in some sectors rather than labor replacing in all sectors.”
I see a lot of speculation on what AI could mean in the future for industries such as SaaS, rating agencies, real estate services, and many others. Yet, so far, the measurable impact is quite limited. Markets seem eager to price in disruption before disruption shows up. The current price action suggests something more nuanced: uncertainty rather than conviction in a certain story. Markets are not decisively pricing in collapse or transformation, they are just discounting a set of open questions which brings me to the next company: S&P Global.
One Asset
The market appears concerned that AI could disrupt S&P Global’s Market Intelligence segment and potentially commoditize elements of its ratings franchise. I do not see the ratings business as structurally threatened. It remains deeply embedded in the financial system, with regulatory entrenchment and strong pricing power. Market Intelligence is more exposed, in my view, but it is also the lowest-margin segment (approximately 18% operating margins versus roughly 60% in ratings). Importantly, it provides steadier recurring revenues compared to the more cyclical ratings business.
S&P has long been considered a “quality compounder” with the typical story attached to it: consistent growth, strong free cash flow conversion, high margins, and disciplined capital allocation. The market is now discounting a more uncertain future. That does not mean the thesis is broken or the business is bad. The narrative has just changed from easy to a few more question marks.
Worth Noting
I published the January 2026 Portfolio Update including two portfolio additions:
A position in the AQR Apex Fund, a multi-strategy hedge fund
Deutsche Boerse, which I view as an emerging market infrastructure monopoly in Europe.
I hope you enjoy the read.
Thank you for reading and enjoy the next week!