Key insights
- The author discusses FactSet's stock decline following Anthropic's AI announcement, arguing the market is overreacting by conflating SaaS and data providers. While AI may disrupt SaaS, FactSet's core data business, enriched by domain expertise, is more defensible. The author suggests the market is underestimating the value of proprietary data and domain knowledge in financial modeling, leading to a bearish sentiment on FDS.
FDS took a dive today, after Anthropic announced that they are releasing a new set of agents specialized for a variety of financial use cases. The stock has also been crushed over the past 12 months from similar announcements.
On one hand, I kind of understand the market's reaction. This might eat into part of FDS's business, but I always thought of FactSet as a data company. The hedge fund I worked at bought a ton of their core datasets, but couldn't care less about whatever software they were offering on top of those.
Which leads me to think that the market is conflating SaaS providers and data providers. Yes, the moat around SaaS has probably shrunk considerably, but the same can't be said for data. Anthropic does not have FactSet's data. Even if they did, data in itself is not inherently valuable. Value comes from domain experience, knowing how to properly model it, making the right assumptions about it, etc. It is entirely different from software.
I could be wrong, but was curious what others thought.