Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. The stock market has cooled on

stocks caught up in the whirlwind of artificial intelligence. Fears over whether AI will disrupt a variety of sectors have triggered big sell-offs.

Morningstar Equity analysts have investigated 132 companies to determine whether that's the case,

and they have concluded that AI is not a universal destroyer.

The team thinks investors should sort through the wreckage and find newly cheap companies

with enduring competitive advantages.

Eric Compton is the director of equity research for the technology sector at Morningstar,

and he's here to tell you where to look.

Welcome back to the podcast, Eric.

That's great to be here.

Can you briefly explain what MOTS are and how Morning Star analysts use them to rate companies?

Sure. So, you know, a very broad question. I'll give kind of the very high-level highlights.

But, yeah, you know, moats are a key

part of are how we analyze stocks. It affects, you know, how we pick winners and losers. It affects

how we think about valuation. So moats fundamentally are, you know, we think about none, narrow and

wide. A no moat company is, you know, something where we don't have high confidence in the excess returns

over their weighted average cost of capital. And so we categorize those as no-moat. Narrow

motes are more like zero to 10 years. We have a high degree of confidence that they'll earn excess

returns. And then wide modes would be not only do we have a high degree of confidence for zero to

10 years, but we have a pretty

good, more likely than not excess returns for years 10 to 20. So kind of can think of it as two

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