Is FactSet (FDS) a Buy or Hold in 2026 Amid Divergent Analyst Forecasts?

In the ever-evolving financial data landscape, FactSet (FDS) stands at a crossroads. With a current stock price of $273.01, the stock trades near its 52-week low of $250.50, significantly below its 52-week high of $496.90. This divergence raises a critical question for contrarian value investors: Is FDS undervalued amid mixed analyst sentiment and strategic AI/cloud investments, or does the stock face structural risks that could undermine its long-term potential?

Undervaluation and Strategic Reinvestment

FactSet's stock price has declined by nearly 45% from its 52-week peak, a sharp correction that may reflect short-term pessimism about margin pressures. However, this drop also creates an opportunity for investors who recognize the company's long-term value. FactSet's fiscal 2026 guidance projects revenue between $2.423 billion and $2.448 billion, with adjusted diluted EPS ranging from $16.90 to $17.60. These figures suggest a disciplined approach to growth, even as the company invests heavily in AI and cloud infrastructure. Management has acknowledged a net margin impact of 150 basis points from these investments, but it emphasizes that these expenditures are foundational for future scalability according to recent reports.

The stock's current valuation appears to discount these strategic moves. At $273.01, FDS trades at a price-to-earnings (P/E) ratio of approximately 15.5x, well below its 52-week average of 25x. This gap hints at a potential mispricing, particularly if FactSet's AI-driven initiatives begin to yield productivity gains and margin recovery by mid-2026.

Mixed Analyst Sentiment and Margin Recovery Timelines

Analyst forecasts for FDS are polarized. UBS upgraded the stock to "Buy" in late 2025, citing confidence in FactSet's durable data platform and AI-driven enhancements. Conversely, Morgan Stanley and Stifel have expressed bearish views, flagging concerns about structurally lower margins and uncertainty around the duration of FactSet's investment phase according to market analysis. This divergence underscores the stock's volatility but also highlights a key contrarian opportunity: the market may be overreacting to near-term margin pressures while underestimating the long-term value of AI integration.

FactSet's partnerships with Amazon and Arcesium are critical to this narrative. The Amazon Quick Research integration allows enterprise clients to access FactSet data within AWS environments, transforming the company from a potential competitor to a collaborator with hyperscale cloud providers. Similarly, the Arcesium partnership offers an AI-enabled platform that unifies asset management workflows, reinforcing FactSet's ability to monetize its technology stack. These moves suggest that margin recovery, while delayed, is not improbable.

Competitive Risks and Market Dynamics

FactSet's primary competitors-Bloomberg, Refinitiv (LSEG), and S&P Global-pose significant challenges. Bloomberg, for instance, reported a 7% YoY revenue increase in H1 2025, driven by subscriptions and advertising. However, Bloomberg faces its own headwinds, including a projected 15–20% terminal revenue erosion by 2028 due to AI and regulatory pressures. Refinitiv's growth has been more sector-specific, tied to retail and restaurant spending, which may not directly compete with FactSet's institutional focus according to industry reports.

The broader financial data market is expected to grow to $59 billion by 2035, driven by demand for real-time and AI-ready data. FactSet's fiscal 2026 guidance aligns with this trajectory, projecting organic ASV (Annual Subscription Value) growth of 4.2–6.2%. While this growth rate is lower than the 15.86% peak in 2021, it reflects a maturing market where differentiation through AI becomes critical.

Historical Growth and Structural Risks

FactSet's historical revenue growth from 2020 to 2025 reveals a decelerating trend. Annual revenue rose from $1.494 billion in 2020 to $2.322 billion in 2025, with growth rates declining from 15.86% in 2021 to 5.4% in 2025. This slowdown raises concerns about market saturation and the diminishing returns of incremental investments. However, the company's recent share repurchase authorization increase to $1 billion signals confidence in its financial position and commitment to shareholder returns according to financial analysis.

The AI investment landscape itself is fraught with structural risks. Infrastructure spending in AI has exceeded $400 billion annually, yet enterprise AI revenue remains below $100 billion, creating a gap that could delay ROI for FactSet and its peers. This mismatch raises questions about whether FactSet's current investments will translate into meaningful margin expansion by 2026.

Conclusion: A Contrarian Case for Buy

For contrarian value investors, FactSet presents a compelling case. The stock's current price near its 52-week low suggests a discount to its intrinsic value, particularly if AI-driven productivity gains materialize. While margin pressures and competitive risks are valid concerns, FactSet's strategic partnerships and market positioning in the AI era provide a buffer against these challenges. The key question is timing: Can FactSet's investments yield returns before the market's skepticism turns into a prolonged bearish narrative?

If the company executes its AI and cloud strategy effectively, FDS could emerge as a leader in the next phase of financial data innovation. For now, the stock appears undervalued, making it a "Buy" for investors with a 12–18 month horizon who are willing to tolerate near-term volatility.