S&P Global Capitalizes on AI Opportunities Through Proprietary Data and Benchmark Businesses; Morgan Stanley Reiterates Overweight and $525 Price Target

Overview

This report summarizes Morgan Stanley's discussions with management following a non-deal roadshow held for S&P Global in New York. It focuses on AI data rights, the productization of proprietary data, the business portfolio, productivity, growth in Ratings and Index, Market Intelligence, and the commodities business, while reiterating an Overweight rating and a $525 price target.

Core views

Management is taking a deliberately conservative approach to AI data rights, prioritizing the protection of differentiated intellectual property over optimizing near-term sales cycles. Negotiations with certain large customers over model training, derivative use of data, and content-clearing rights are indeed taking longer, creating volatility in contract timing; however, the company stated that it has not lost any competitive projects as a result and has not made pricing concessions, while a recent major customer renewal included a significant price increase. Management believes customers' increasing focus on AI rights actually validates the strategic value of SPGI's proprietary data. Terms will differ across datasets: more commoditized content can be handled more flexibly, while proprietary assets will receive stricter protection. As AI adoption expands, SPGI believes differentiated data and the ability to transform data into an "AI-ready" format will strengthen its competitive position. Management cited SNL, Compustat, Platts, and Visible Alpha, which are difficult to replicate in terms of depth, historical breadth, or granularity. Visible Alpha has not yet been fully converted into an AI-ready dataset, but this is expected to occur gradually. Kensho is organizing various datasets within a unified data architecture, improving machine readability, and combining existing intellectual property into new datasets and products, making its role in the AI transformation increasingly important. The portfolio strategy remains centered on retaining high-quality assets and maintaining a high bar for M&A. Management believes the Mobility spin-off created significant shareholder value and further highlighted the strategic quality of the four remaining divisions, with no current need for another major portfolio adjustment. Market Intelligence may divest certain smaller products of lower strategic importance, but major acquisitions must meet a very high threshold. datacenterHawk is viewed as an appropriate bolt-on acquisition: its data was already frequently cited by customers, and adding upstream information on data center construction pipelines, site selection, and capacity constraints can enhance SPGI's broader power and energy offering. Given the lack of an urgent need for transformational M&A, capital returns remain a priority, and the company recently increased its share repurchase authorization. Productivity is becoming an important lever for reinvestment and margin expansion. SPGI is using next-generation AI and automation tools to redesign software development, analyst and research workflows, and order-to-cash processes. Management plans to reinvest part of the efficiency gains in new growth opportunities and convert the remainder into margin improvement, balancing growth investment with operating leverage. The Ratings business is positioned to benefit from growth in private markets and AI-related financing. SPGI has a strong position in private-market issuance, and management believes there is no fundamental difference between applying rating methodologies to publicly traded and private transactions. However, the company will not compete solely to expand market share, instead emphasizing ratings quality and credibility. AI financing could also increase traditional corporate issuance and structured finance opportunities and enable SPGI to participate across multiple tranches of the same financing arrangement. As private credit and other nontraditional financing markets develop, management believes the company is well positioned. The Index business still has substantial room for addressable market expansion, driven by product innovation and new asset classes. Following the recent leadership transition, management remains confident in the growth outlook and views the assets-based fee model as structurally attractive. Beyond traditional index products, the company is exploring areas such as prediction markets and emerging DeFi participants. Management views potential intellectual property infringement or new uses of benchmarks not only as threats but also as potential commercialization opportunities. The continued shift of assets toward indexed products further reinforces the value of its brand and benchmark businesses. Weakness in Market Intelligence is mainly concentrated in smaller products, while the core data business remains healthy. New sales in Sustainability have declined, and changes in the regulatory environment have made the sales pipeline more difficult to build, but management has not identified significant customer cancellations. Desktop growth is relatively moderate, although the product is performing steadily and generates reciprocal sales leads with the faster-growing data business. The company's strategy is to improve the efficiency of the Desktop platform while expanding enterprise licensing, introducing capabilities such as Visible Alpha and MCP, generating sales leads through Kensho, and incorporating more SPGI data into a unified data architecture. Growth in Commodities Insights is more dependent on market conditions, but management expects it to return to its 6%–8% medium-term growth framework. The company is advancing controllable initiatives, including improving sales execution, accelerating research production, and expanding into agriculture, power, maritime, and freight. Rising data center demand is already reflected in power forecasts and related datasets. Management aims to integrate upstream capacity, power availability, freight, and other energy information into more comprehensive solutions and extend its benchmark and data capabilities to more non-energy companies. Management defined its top priority for 2027 as executing existing plans and reaching the upper end of the established framework while developing opportunities among non-energy companies, in supply chains, prediction markets, and other new use cases. Morgan Stanley believes the combination of proprietary data, AI-ready delivery, productivity initiatives, and continued product innovation will enable SPGI to continue investing in growth while maintaining attractive economics. From an investment perspective, Morgan Stanley reiterates its Overweight rating. The report sees upside potential for issuance activity in 2026 and favors the long-term compounding characteristics of ratings agencies. It also believes SPGI has stronger valuation support than Moody's: SPGI trades at a five-turn discount to MCO on 2027 P/FCF. Approximately 65% of SPGI's revenue and approximately 80% of its profit come from benchmark-oriented businesses. The report expects revenue to sustain high-single-digit growth and margins to expand by 50–75 basis points annually, driving low-double-digit EPS growth. The company also plans to return 85% of free cash flow through dividends and repurchases. By 2028, pricing power, product innovation, global expansion, and internal cross-selling are expected to support low-double-digit EPS compound growth. The base case assumes a 7% organic revenue CAGR and an 11% adjusted EPS CAGR from 2025 to 2028, with operating leverage driving approximately 340 basis points of cumulative adjusted operating margin expansion to approximately 54% by 2028; this corresponds to a $525 price target and 21x 2026E EBITDA. The bull case assumes faster issuance and financial-sector growth and synergies above initial expectations, with organic revenue and adjusted EPS CAGRs of 11% and 16%, respectively, over the same period, corresponding to $729 and 28x 2026E EBITDA. The bear case assumes weaker GDP causes issuance to slow, weak equity markets weigh on Index revenue, and Market Intelligence loses share, resulting in 3% CAGRs for both total revenue and EPS over the same period, corresponding to $301 and 13x 2026E EBITDA. The $525 price target is derived from a DCF using an 8.0% WACC and a 2.5% perpetual growth rate.

Analysis framework

The report first organizes management commentary from the non-deal roadshow, outlining the operating logic across AI data rights, data products, portfolio and capital allocation, and the four major business segments. It then incorporates Morgan Stanley ModelWare forecasts to analyze revenue, margin, and EPS trajectories and tests operating outcomes under bull, base, and bear scenarios. Finally, it determines the price target through a DCF and compares SPGI with Moody's on a relative 2027 P/FCF basis.

Methodology notes

• Valuation MethodDCF Discounted Cash Flow

  Discounted Cash Flow Valuation

  The report discounts future cash flows to present value and derives SPGI's $525 price target using an 8.0% weighted average cost of capital and a 2.5% perpetual growth rate.

• Valuation Method

  2027 P/FCF Relative Valuation Comparison

  The report compares SPGI's and Moody's 2027 price-to-free-cash-flow multiples, noting that SPGI trades at a five-turn discount and concluding that SPGI has stronger valuation support.

• Valuation Method

  Bull, Base, and Bear Risk-Reward Scenarios

  The report varies assumptions for issuance activity, revenue growth, synergies, margins, market conditions, and competition to produce three scenario outcomes of $729, $525, and $301.

• Company Fundamentals and Financial Framework

  Morgan Stanley ModelWare Forecasting Framework

  The report uses Morgan Stanley's ModelWare framework to forecast revenue, EBITDA, and EPS and links operating growth, margin expansion, and capital returns to the earnings trajectory.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• S&P Global Inc (SPGI.N, SPGI UN)

  The report believes the company will benefit from AI-ready proprietary data, private-market and AI infrastructure financing, indexed asset allocation, pricing power, and productivity improvements.

  Strengths

  The company has hard-to-replicate datasets, a wide moat, strong market share, and high margins; approximately 65% of revenue and approximately 80% of profit come from benchmark-oriented businesses, its balance sheet is sound, and it plans to return 85% of free cash flow.

  Weaknesses

  AI data rights negotiations with certain large customers are taking longer; new Sustainability sales and the pipeline are weak, Desktop growth is moderate, and Commodities Insights is relatively dependent on market conditions.

  Comparison

  SPGI trades at a five-turn discount to Moody's on 2027 P/FCF, and Morgan Stanley believes SPGI has stronger valuation support.

  Risks

  Weaker issuance activity, weak equity markets, intensified competition in Market Intelligence, or limited returns on AI investment could reduce revenue and EPS growth.

Key data

• Rating and Price TargetOverweight; $525.00Morgan Stanley reiterates its Overweight rating and price target
• Closing Price$426.66August 19, 2026 closing price
• Market Capitalization$126,078mmCurrent market capitalization presented in the report
• 52-Week Price Range$529.30—$361.02Range presented in the report
• Net Revenue Forecast2025 $15,338mm; 2026E $15,612mm; 2027E $15,773mm; 2028E $16,894mmMorgan Stanley ModelWare forecast table
• EBITDA Forecast2025 $7,669mm; 2026E $8,287mm; 2027E $8,504mm; 2028E $9,207mmMorgan Stanley ModelWare forecast table
• ModelWare EPS2025 $14.70; 2026E $16.64; 2027E $18.43; 2028E $20.95Morgan Stanley forecasts
• Total Organic Revenue Growth2025 7.8%; 2026E 7.9%; 2027E 6.4%; 2028E 6.2%Key earnings driver forecasts
• 2026E Segment GrowthRatings 8.5%; Market Intelligence 5.8%; Index 15.5%; Commodities Insights 4.7%Ratings, Market Intelligence, and Index figures are revenue growth rates; Commodities Insights is an organic growth rate
• 2027E Segment GrowthRatings 7.4%; Market Intelligence 6.7%; Index 8.8%; Commodities Insights 6.5%Key business growth forecasts
• 2028E Segment GrowthRatings 7.3%; Market Intelligence 6.7%; Index 7.5%; Commodities Insights 6.5%Key business growth forecasts
• Benchmark-Oriented Business MixApproximately 65% of revenue and approximately 80% of profitThe report uses this to emphasize business resilience and asset quality
• Capital Return Target85% of free cash flowPlanned return to shareholders through dividends and share repurchases
• Base Case$525; 21x 2026E EBITDA2025–2028 organic revenue CAGR of 7%, adjusted EPS CAGR of 11%, and cumulative operating margin expansion of approximately 340 basis points to approximately 54%
• Bull Case$729; 28x 2026E EBITDA2025–2028E organic revenue CAGR of 11% and adjusted EPS CAGR of 16%
• Bear Case$301; 13x 2026E EBITDA2025–2028E total revenue and EPS CAGRs of 3%
• DCF ParametersWACC 8.0%; perpetual growth rate 2.5%Used to derive SPGI's price target
• Relative ValuationFive-turn discount to MCOBased on a 2027 P/FCF comparison
• Institutional Ownership and Hedge Fund PositioningInstitutional ownership 59.4%; hedge fund industry long/short ratio 1.4x; industry net exposure 7.1%Positioning metrics presented in the report

Impact & implications

The report believes AI's impact on SPGI is not simply an increase in near-term data sales; more importantly, it enhances the strategic value of proprietary data, creates new products, and unlocks margin opportunities through automation. The Ratings and Index businesses provide structural growth, while Market Intelligence and Commodities Insights need to regain momentum through product integration, sales execution, and new applications. A high free-cash-flow return ratio, limited need for major M&A, and a valuation discount to MCO collectively support the report's reiterated Overweight view.

Risks

• Macroeconomic uncertainty, the pull-forward of financing demand, wider spreads, or reduced AI infrastructure financing could cause debt issuance to fall below expectations.
• Intensifying competition in AI could cause Market Intelligence to lose market share.
• Weak equity markets could weigh on Index business revenue.
• Higher AI investment spending may produce only limited results, undermining expected growth and margin improvement.
• Prolonged negotiations over AI training, derivative use, and content-clearing rights could create near-term volatility in the timing of sales recognition.

What to watch

• Monitor debt issuance growth and the effects of M&A, refinancing, GDP, credit spreads, and AI infrastructure financing on issuance activity.
• Monitor whether AI and automation productivity initiatives can drive margin expansion.
• Monitor the pace at which assets continue migrating toward passive investment and indexed products.
• Monitor the company's pricing power and renewal pricing for major customers.
• Monitor adoption of Market Intelligence's AI products, the integration of Visible Alpha and MCP, and the expansion of enterprise licensing.
• Monitor execution progress in 2027 among non-energy companies, in supply chains, prediction markets, and other new use cases.