Business Services Stocks Gain Favor Amid AI Sector Rotation, Wolfe Research Says

Business and information services stocks are showing renewed strength, potentially signaling a capital rotation away from high-flying artificial intelligence names and an easing of investor concerns about AI's disruptive impact on the sector, according to a new report from Wolfe Research.

The firm's proprietary Business and Information Services Index has climbed 4% month-to-date, significantly outpacing the 1% gain in the S&P 500 and the flat performance of the S&P equal-weight index. This move coincides with an 11% decline in the SOXX semiconductor index over the same period, suggesting a shift in market leadership.

Easing AI Fears and Improving Fundamentals

Wolfe Research noted that investors appear less worried about the potential negative effects of AI on business services. The firm pointed to FactSet’s (FDS) fiscal third-quarter results as providing early evidence of AI monetization benefits, helping to calm market fears.

Despite ongoing macroeconomic uncertainty in the second quarter, the firm sees stable or improving underlying fundamentals for the sector. Key drivers supporting this view include solid debt issuance, positive equity market performance, and steady lending volumes.

Top Picks Heading into Earnings

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Ahead of the second-quarter 2026 earnings season, Wolfe Research identified MSCI (NYSE:MSCI) and S&P Global (NYSE:SPGI) as its top picks.

• MSCI: The firm sees momentum from recurring index subscription sales and increased adoption of custom indexes by hedge funds and banks.
• S&P Global: Strong second-quarter debt issuance data suggests a potential for upside surprises to consensus estimates. The firm also expects Moody's (MCO) to benefit from these trends, but sees more room for guidance increases at S&P Global.
• Fair Isaac (FICO): Wolfe believes consensus estimates are underappreciating the company's pricing power.

Both MSCI and S&P Global are also poised to benefit from rising equity markets, which would boost their asset-based fee revenue. Wolfe maintains a moderately positive view on TransUnion (TRU) and Verisk (VRSK) as well.

Sector Earnings Outlook

Looking at the broader sector for the second quarter, Wolfe Research projects that seven companies will beat earnings per share (EPS) estimates, with four coming in-line and two missing. On the revenue front, the firm anticipates four companies will beat estimates by more than 1%, while nine will report in-line results.