Can you believe we’re already two months into the new year? While we’re more than midway through the first quarter, investors should still be ready to play the long game, especially now that volatility has struck the portfolios that are a bit too weighted in technology and AI. As it turns out, AI might have a negative impact on businesses that may not have wide enough economic moats in the era of agentic AI technologies.
While I wouldn’t throw in the towel on the AI trade, I do think that much of the revolutionary potential may already be priced in. And if it takes a few years for firms to harness the full power of AI to drive profitability, I do think the “show me the money” stage of this AI boom might cause sub-par returns, even for the biggest and brightest AI innovators. Of course, I could be wrong, and the bull case could play out for AI.
Either way, though, I think the best opportunities lie in names that are just outside of the radar of most retail investors. So, instead of pursuing the obvious AI plays, the potential winners across the stack that may not have been recognized (a lot of them have been, especially in the semiconductor scene), I think it makes sense to view even the lower-tech firms as having the potential to benefit greatly from the adoption of AI.
Indeed, AI-native applications, platforms, and, of course, agents might be the new SaaS of the 2020s and beyond. And if that’s the case, I’d argue that such value-adding technologies stand to benefit a broader range of firms. In any case, this piece will focus on two names that might be great opportunities for Canadians in 2026.
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Moody’s
Let’s start things off with an American firm that I believe has been misunderstood. Moody’s (NYSE: MCO) is a credit-rating titan and analytics firm that’s been punished in recent sessions, thanks in part to fears that AI could disrupt the business. Of course, perhaps there’s no better way to analyze tons of financial data than AI. It can spit out a credit rating just the same, right? Even if AI proves capable of doing such, I think Moody’s isn’t going anywhere.
Arguably, it’s a better business when AI does most of the heavy lifting. At the end of the day, Moody’s has the brand power, the regulatory moat (you can’t just start up a credit rating agency overnight with AI in the driver’s seat, especially given the accountability on the line), and the access to the sensitive data. Not to mention, Moody’s is also innovating in agentic AI.
While the software side of the business may seem at risk amid the AI disruption, I’d be inclined to view it as on the right side of innovation, especially since foundation models and Moody’s expertise could lead to a business that boasts an even wider moat.
Thomson Reuters
Speaking of data advantages, Thomson Reuters (TSX: TRI) stands out as another great firm that could win in AI, even though it looks to be an early loser from the rise of agentic AI. Anthropic might have a new AI legal tool, but I’d argue that Thomson Reuters has everything it takes to bring out the best in such a tool.
That’s why shares popped over 11% on Tuesday after Anthropic shone a light on the company’s legal AI innovation. Indeed, Thomson Reuters has a moat, and the recent sell-off stands out as an opportunity more than anything else.
