杰富瑞-美国主题研究：好得不像真的：当前被低估的AI赢家-Too Good to Be True：AI Winners Currently in the Discount Bin-20260305

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USA|ThematicResearch

EquityResearchMarch5,2026

TooGoodtoBeTrue:AIWinnersCurrentlyintheDiscountBin

Despitetheplethoraofidiosyncratic,macroandthematiccrosswindsbuffetingstocks,perceivedAIdisintermediationhasprovidedthemostpronouncedsharedislocations.WhileitremainsearlydaysintermsofAIdevelopment&deployments,andtherewillcertainlybeLTcasualties,webelievesomestockshavebeenunjustlyaccusedinthecourtofinvestoropinion.Jefferies'analystsprovidealistof24dislocatedstocksthattheyexpecttobeLTwinners.

TheUSequitybenchmarksremainwithinstrikingdistanceofall-timehighs,butbeneaththesurface,singlenamedispersionhasbeenpickingup.Infact,the1MrealizedcorrelationforSPXconstituentshasconsistentlysatnear15Ylowssincelatein'25.Asidefromtheexogenousshockspresentedbymacro,policyandgeopoliticaldrivers,thesearchforindustrieswiththemost(orany)riskfromAIdisintermediationhasbeenoneofthemostconsistentthemes.SowhiletheoverallSPXisamere2%fromarecord,thedisparitybetweenhavesandhave-notshasrarelybeengreater.

Ona6molookback,REITs,software,professionalservices,diversifiedfinancialsandinsurance(particularlybrokers)industrygroupshaveunderperformedtheSPXby10%ormore.WhileitremainstooearlyintheadoptioncycletoevaluateclearevidenceofAIdisintermediation,wecontendthatformanycompanieswithinthesesubsectors,investorshaveimproperlyshiftedtheburdenofproof.Aswedemonstrateinthisreport,manyofthecompaniesinthesesubsectorshaveproprietarydata,operatewithinindustriesrifewithsecurity/trust/regulatory/scalemoatsorcouldactuallyseetailwindsfromAIloweringupstreambarrierstoentry.

TheRecentRelativePerformanceofSeveralSubsectorsHasBeenSignificant

SPXIndustryGroupPerformance(L6M,Normalized)

140

135

130

125

120

115

110

105

100

95

90

85

80

75

70

65

SPXComm&ProfServDIVFINANCIALIXCONSSRVIDXINSURANCEINDEXREALESTMNGMTSFTW&SVCSINDX

Source:Bloomberg,Jefferies

Jefferies'analystsidentified24stocks,predominatelyinthesesubsectors,thathavebeenoverlypunishedonperceivedAIrisk.InmanycasestheybelievethesecompanieswilleventuallybeseenasAIbeneficiaries,butallhavestrongmoatsandbusinessmodelsthatsuggestvaluationsare

Source:Bloomberg,Jefferies

JefferiesEquityResearch*|EquityAnalyst

(888)

JEFFERIES|research_support@

AndrewAndersen*|EquityAnalyst

+1(212)

284-8105|aandersen@

JohnColantuoni*|EquityAnalyst

1(212)

778-8634|jcolantuoni@

JoeDickstein*|EquityAnalyst

+1(212)

778-8771|jdickstein1@

DanielT.Fannon*|EquityAnalyst

(415)

229-1523|dfannon@

JosephGallo*|EquityAnalyst

(212)

336-7402|jgallo@

JamesHeaney*|EquityAnalyst

(212)336-1

171|jheaney@

JohnHecht*|EquityAnalyst

(415)

229-1569|jhecht@

SheilaKahyaoglu*|EquityAnalyst

+1(212)

336-7216|sheila.kahyaoglu@

SuneetKamath,CFA*|EquityAnalyst

(212)

778-8602|skamath@

SamadSamana*|EquityAnalyst

(212)

284-4649|ssamana@

BrentThill*|EquityAnalyst

(415)

229-1559|bthill@

SurinderThind,CFA*|EquityAnalyst

(415)

229-1515|sthind@

Name

Analyst

PT

CurrentPrice

ABNB

Colantuoni

$165

$135.85

AON

Andersen

$408

$338.77

APP

Heaney

$700

$508.56

BXP

Dickstein

$70

$55.47

CBRE

Dickstein

$187

$141.19

COF

Hecht

$300

$194.27

CSGP

Thind

$67

$48.91

DASH

Colantuoni

$250

$183.48

EQH

Kamath

$66

$39.78

KVYO

Samana

$29

$21.18

LDOS

Kahyaoglu

$215

$175.66

LNC

Kamath

$60

$35.13

META

Thill

$1,000

$660.57

MS

Fannon

$221

$162.55

MSFT

Thill

$675

$410.68

NOW

Samana

$175

$120.38

OKTA

Gallo

$105

$79.65

PANW

Gallo

$215

$163.16

SCHW

Fannon

$122

$95.41

SLM

Hecht

$35

$19.89

SNOW

Thill

$250

$177.45

SPOT

Heaney

$650

$552.12

SSNC

Thind

$105

$75.48

WTW

Andersen

$386

$300.52

Pleaseseeanalystcertifications,importantdisclosureinformation,andinformationregardingthestatusofnon-USanalystsonpages14-20ofthisreport.

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compelling.Thelistincludes:ABNB,AON,APP,BXP,CBRE,COF,CSGP,DASH,EQH,KVYO,LDOS,LNC,META,MS,MSFT,NOW,OKTA,PANW,SCHW,SLM,SNOW,SPOT,SSNCandWTW.

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BrentThill-Software&Internet

Microsoft(MSFT,Buy,PT:$675)-WeseeMSFTasuniquelypositionedtoconsolidateenterpriseAlspendgivenitsend-to-endplatformacrossAzure丿M365andCopilot丿underpinnedbyunmatchedenterprisedistributionandbalancesheetstrength.WhilemanylookatOpenClaw&ClaudeCoworkassuperiortoCopilot丿weviewtheseasnotsuitableforenterprisegovernance丿andexpectthatMSFT(withitsend-to-endplatformwithclearshareintheenterpriseproductivitysuite)willbealongtermwinnerasitcontinuestoimproveitsproductswhichcanleveragebothOpenAlandAnthropicmodels丿reinforcingMSFT丿sproductivitymoatandcreatingadurable丿multiyearAlmonetizationcycle.Robustbackloggrowth(110%inF2Q)丿aidedbybothOpenAlandAnthropiccommits丿providesclearvisibilityintoacceleratingdemandacrosscorecloudandAlworkloads.ThisisfurtheramplifiedbyOpenAl丿whereMSFTbenefitssimultaneouslyasacloudserviceprovider丿aninvestor(27%owner)丿arevenue-sharingpartnerandanlPrightsholder.

Webelievethestockisde-riskedgivenimprovedgrowthvisibility丿anAl-drivenmixshift丿andoffersattractiverisk/rewardon20xCY27EEPS丿athree-turndiscounttohyperscalerpeers(GOOGL/AMZNat23x/23xCY27EEPS).KeycatalystsincludeAzuregrowthbenefitingfromcapacitycomingonline丿aclearinflectioninM365Copilotadoption&productqualitydrivingincrementalARPU丿andsustainedOpenAlmomentumflowingthroughAzureconsumptionandrevenueshare.

Snowflake(SNOW,Buy,PT:$250)-WebelievethemarketunderappreciatesSnowflake丿sdurabilityanditsLTroleasafoundationallayerforAl-drivendataworkloads.AsenterprisesgenerateandanalyzeincreasingamountsofdatatosupportAlusecases丿Snowflakesitsatthecenterofthisdataflow丿benefitingfromrisingdatavolumesregardlessofwhichmodels丿applicationsoragentscustomersdeploy.Snowflake丿spushintonativeAltooling丿includingCortex丿Snowflakelntelligenceanddeveloper-orientedofferings丿allowscustomerstobuildanddeployAlusecasesdirectlyongovernedenterprisedata丿reducingfrictionandincreasingstickiness.Thecoredatawarehousingbusinessremainsstrongandcontinuestocompound丿whileAl-relatedproductsrepresentincrementalupsideandarealreadygainingmeaningfultractionacrosstheinstalledbase.Webelievethisdynamicsupportsadurable~30%revenueCAGRoverthemediumterm丿withacceleratingRPOgrowthprovidingimprovingvisibilityintoforwarddemand.

SNOWsharesaredown>20%%YTD丿underperformingthelGVsoftwareindex(down~20%).Thevaluationgapvs.Databricksisparticularlystriking丿withDatabricksvaluedat$134BinprivatemarketsversusSnowflake丿s$63Bmarketcap丿implyinga$71Bspread.WhileDatabricksisgrowingfaster丿webelievetherelativemultipledifferentialhasbecomeoverlystretched丿especiallygivenSnowflake丿sscaleandimprovinggrowthoutlook.lmportantly丿SnowflakeandDatabricksnowrepresentacleartwo-horseraceinlarge-scaledataanalytics丿withamplerunwayforbothplatformstogrowformanyyears.At8xCY27sales丿Snowflakeistradingjustone-turnaboveits3Ytroughdespitemultiplecatalystsahead丿whichincludetherampofSnowflakelntelligenceandCortexCode丿improvedsalesproductivityfollowinglastyear丿sGTMchanges丿andcontinuedRPOaccelerationtranslatingintorevenuegrowth.Weseeanattractivemulti-yearrisk-rewardskew丿withvaluationprovidingdownsidesupportandexecutiononthesecatalystsdrivingmeaningfulupside

MetaPlatforms(META,Buy,PT:$1000)-WebelieveMETAisaclearAlbeneficiary丿withlarge_scaleAlinvestmentsalreadydrivingmeasurablegainsacrossengagementandmonetizationandsettingupareaccelerationingrowthin2026.Whileelevatedcapexpressuresnear_termmargins丿weseeincreasingvalidationofAlROlasMETAcontinuestostackimprovementsinitscorerecommendationandconversionengines.DespiterecentLlamaexecutionissuesandskepticismaroundtalentandculture丿METAhasallthecriticalAlingredientsatscale—users/data丿compute丿andtalent—andisreportedlysettoreleasenewfrontiermodel(s)in1H26thatcouldhelpresetthenarrative.Astheinvestmentcycleaccelerates丿incrementalrevenueenginesareactivating丿withWhatsApppoisedto

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scalefroma~$9Brunratetodayto~$36BbyFY29,alongsideadditionalupsidefromThreadsandLlama/AI.

DespitehavingastellarCYQ4print,METAsharesareflatwithitsmultiplecompressing4%stillleavingitatafour-turndiscounttoGOOGL,at19xfwdNTMEPS,belowhistoricalnorms.Whilethisreflectsconcernsaroundmarginspressure,capexramp,andAIexecutionitalsocreatesmeaningfulupsideifMETAaddressestheseheadwindswhichwebelieveislikely.

SamadSamana-Software

ServiceNow(NOW,Buy,PT:$175)-InvestorconcernshavefocusedondisruptionanddisintermediationrisksfromagenticAI.Specifically,AIagentsdisplacinghumanworkerswouldcannibalizeseatgrowth(NOWhasahybridseat/usage-basedpricingmodel),andcross-platformagenticexecutioncouldsidestepNOW’spurpose-builtworkflowengine.Additionally,thepaceandsizeofNOW’sM&AhaveacceleratedalongsidethefasterpaceofinnovationwithinAI/softwaremorebroadly(~$12B+M&Aexcl.tuck-insinTTM).SomeinvestorsfearthatNOWcouldexecutetransformativeM&A,afactorthatcouldleadtoplatformintegrationissuesandfinancingheadwinds.Still,webelievetheselloffisoverdoneandthatsharesarepositionedtorecover,as:1)NOWisatrustedpartnerofitslargeenterprisecustomers,asitsplatformservesasasinglepane-of-glassacrossIT,HR,securityandoperations;2)NOW’sfully-integratedAIsuite(NowAssist,AutonomousWorkforce,AIControlTower)positionsthecompanyastheorchestrationlayerforcross-organizationagenticworkflowsand3)NOWiswell-positionedtorolloutearlyAIusecasesinafrictionlessway,asitscustomershavedeeplyintegratedtheNOWplatformintotheirexistingtoolsandkeyorganizationalflows.

Fora$13B+enterpriseprovidergrowinghigh-teensatscale,wethinkshareslookattractiveat~19xour’27FCF.Weseethefollowingcatalystsdrivingshareshigher:1)anaccelerationinNNACVdrivenbyAIadoption(NowAssist,AgenticWorkflows,AIControlTower,creditusage);2)positiverevisionsonrecent2026organicrevandcRPOgrowthexpectationsand3)continuedoperatingleveragedrivenbyinternallydeployedAI.

Klaviyo(KVYO,Buy,PT:$29)-InvestorsarebroadlycautiousaroundAIdisruptionrisktomarketingtechnology.ForKVYOspecifically,investorswanttounderstandhowthecompany’splatformcanmaintainanedgeagainstnewAI-nativetoolstargetingmarketingpersonalizationandcustomerservice.Additionally,investorinboundshavebeenfocusedonhowKVYOwillbepositionedshouldeCommercebecomemoreautonomousandagenticinthefuture.WebelieveKVYOiswell-positioneddespitemorecompetitionwithinitsspace,since:1)KVYO’sunderlyingdataandmessaginginfrastructureprovideadefensiblemoatthatisdifficulttoreplicateatscale;2)itsShopify(SHOP,Hold,PT:$125)partnershipfeedstheplatformflywheelwithproprietary1Pdataandalignsitwithapotentialleaderinagenticcommerceand3)KVYOservesastherevenueengineforitscoreSMB/MMcustomerbase,makingitmorechallengingforlargecustomerstorip-and-replacetheplatformwithanAIupstart.

Weseethevaluationasveryaffordablefora20%+growerwithimprovingprofitability--KVYOtradesat4.4xour’26GP$and3.8xour’27GP$estimates.Webelieveshareswillbegintore-ratehigheronstrongfundamentalperformancedrivenby:1)AI-drivenaccelerationinplatformusage,whichshouldtranslatetotoplinegrowthgiventhecompany’susage-basedpricingmodel;2)anacceleratinggrowthcontributionfromnewerAIandserviceproductsand3)improvingupmarket/int’lGTMexecutionfollowingtheintroductionofco-CEOChanoFernandez.

JoeGallo-Software

PaloAltoNetworks(PANW,Buy,PT:$215)-InvestorshavebeenworriedaboutpotentialcompetitionfromLLMvendors,whichcouldimpactthefuturegrowthtrajectoryaswellasthegrossmarginsof

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cybersecurityvendors.WebelievePANW’sleadingplatformapproachshouldcontinuetobenefitfromCISObudgetconsolidation,whileitsbreadthoftelemetry,data,andcapitalprovidesanimportantdifferentiationagainstLLMs(asdoesitshardwarefirewallapplianceswhichwedonotexpectLLMstotrytoreplicate).EntryintotheidentitymarketviaacquisitionofCyberArk(frequentlyhighlightedasbestidentityassetincyber)unlocksanewfunneltocapitalizeonagentictailwinds(agentswillneedtohaveidentitiesandthosemustbesecured)asAIrevenuematerializes.

PANWcurrentlytradesat22xNTMFCFvs.3Yaverageof31xNTMFCF.Our$215PTimplies~29xFY27FCF(Jefestimate).CatalystsincludeOAI/Anthropicclarityoncyberintentions,CYBRintegrationandmaterializationofAI/agenticsecurityrevenue.

Okta(OKTA,Buy,PT:$105)-WebelievetheexplosioninNHIs(non-humanidentities)willcreateastrongtailwindtoidentityvendors,outweighinganybudgetpressuresfromLLMs.RecentGTMchangessupporta“yearofharvesting”whilecurrentconsensusexpectationsappearbeatable.Thiscombinationshoulddrivepositiveestimaterevisions,whileAImaterializationshouldeventuallysupportgrowthandsubsequentlyamorepremiummultiple,relativetomid-capcyber.

Oktacurrentlytradesat3.4xNTMrevenue(all-timehistoricaltroughof3.1x).Our$105PTimplies~5xCY27rev.CatalystsincludeOAI/Anthropicclarityoncyberintentions,GTMefficienciesandmaterializationofAI/agenticsecurityrevenue.

JohnColantuoni-Internet

Airbnb(ABNB,Buy,PT:$165)-ThekeyconcernforABNB–andOnlineTravelatlarge–isthatAIagentscouldestablishsupplyrelationshipswithaccommodationproviders(

e.g.hotels

orrentalproperties),allowingconsumerstobookaccommodationswithoutusinganestablishedsupplymarketplacelikeABNB(ortheOTAs).WebelievethatABNBisuniquelyinsulatedagainstriskofdisintermediation,giventhatitshighlyfragmentedsupplybase(90%ofhostsareindividualpropertyowners)wouldbedifficulttoreplicate.Asaresult,ABNBwouldlikelyneedtowillinglyprovidetheunderlyingsupplytoAIagents,puttingitinapositionofleveragetoensureitmaintainspropercontroloverthecustomerexperienceandattractiveuniteconomics.WealsothinkABNB’smoatisillustratedbyanumberofvalue-addservicesforbothhosts(“AirCover”damageprotectioninsurance,Revenuemanagementtools,paymentscapabilities)andguests(customerservice,flexiblepaymentoptions)thatwouldbedifficultforAIagentstoreplicate.OurBuyratingispredicatedonbothinsulationfromAIdisintermediationandanattractivefundamentaloutlook.Recentimprovementstotheproductexperience,expansionintonewverticalsandevent-driventailwindsin2026supportelevatedNights/Bookingsgrowthand,combinedwithgreaterexpensediscipline,yieldanattractiveEBITDAalgorithm.

WethinkABNB’sstructuralbarrierstoAIdisintermediationmakeitamongthemostlikelynamestooutperforminInternetoncesentimentimproves.Our$165PTimplies17x’27EV/EBITDA,whichrepresentsa~50%premiumtothepeer-basedgrowth-adjustedmultiple.WebelieveapremiumisjustifiedbysuperiorinsulationfromAIdisintermediationandpotentialupsidetoestimates.

DoorDash(DASH,Buy,PT:$250)-ThekeyconcernforDASHisthatAIagentscouldbecomeadeptatroutingdeliveryordersviatheplatformthatoffersthemostattractivecombinationofspeedandprice,therebycreatingaracetothebottomamongplayersincludingDoorDash,UberEats,GrubHubandpotentialnewentrants.Inaddition,theCitrinireportspecificallywrote“Codingagentshadcollapsedthebarriertoentryforlaunchingadeliveryapp.Acompetentdevelopercoulddeployafunctionalcompetitorinweeks,anddozensdid,enticingdriversawayfromDoorDashandUberEatsbypassing90-95%ofthedeliveryfeethroughtothedriver.”Whattheseconcernsmissisthatpriceisprimarilyafunctionofnetworkdensity,whichtakessignificanttimeandcapitaltobuild(byattractingDashers,merchantsandconsumerstothemarketplace),regardlessofaccesstoagenticAI.Further,consumerscareaboutmorethanjustpriceandETA–theywantselection,quality,membershipbenefits,strong

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customerservice丿etc.–allofwhichimprovewithscaleathighlymanagedmarketplaces丿asthereal-worlddataneededtoimproveisnotavailableonline.

WeviewDASHasamongthemostlikelycandidatesinlnternettooutperformoncesentimentbeginstoimprove丿duetothestructuralbarrierstoAldisintermediationinplace.Our$250PTimplies23x丿27EV/EBlTDA丿whichrepresentsa40%premiumtothecurrentmultipleandis35%aboveourtargetmultipleforUBERonrelativeinsulationfromAV/Alrisk.

JamesHeaney-Internet

AppLovin(APP,Buy,PT:$700)-ThedisruptionnarrativefocusesonAppLovin丿sleadershippositionasthelargestmobilegameadvertisingnetwork丿whereitgrewrevenue70%Y/Yin2025atan82%EBlTDAmargin.TheperceivedriskisgenerativeAl丿sabilitytomakeitsignificantlyeasiertocreatemobilegamecontent丿aswellasthepotentialtodistributeitinaclosedmarketenvironmentvs.thecurrentopenmarketthatAPPleads.Onvolumeofcontent丿aproliferationofAl-generatedmobilegameswouldactuallybeanacceleranttoAPPsbusiness丿asthosegameswouldstillneeddistributionanduserdiscovery丿whichwouldbenefitAPPasthelargestadnetwork.Alforadcreativeisalreadyatailwind丿asthelargestadcampaignsregularlyconsistof10k+differentadcreatives丿usingreinforcementlearningforadtargetingtoplacetherightadsinfrontoftherightconsumers.AfearisthatAl-generatedgamesmayonlyexistwithinawalledgardenecosystemthatcutsout3PadnetworkslikeAPP.Weviewthishighlyunlikely丿as:1)GoogleandApplearealreadythelargestappstoresandwouldn丿twanttogiveupthatleadershippositionand2)ifAlgamesreallyarethateasytocreate丿theywon丿texistwithinjustoneclosedecosystem丿andthebestcontentwillstillwantthewidestdistributionviaAPP丿sadnetwork.APP丿smoatisitsdatascaleandadtargetingmodelstrainedonthatdata丿shouldmobilegamesstillexistwithinappstores丿thosecompanieswillstillneedadnetworkstodrivedownloadsofthoseapps.

Our$700PTisbasedon25xourFY27EBlTDAof$9.45B丿currentlytradingat17xand6turnsbelowits2Yaverageof23x.Catalystsincludethe1H26fullgeneralaudiencelaunchofAPP丿se-commerceadsplatform丿human-derivedupgradestoitsAladtargetingmodelsandcontinuedearningsbeatsfromthecoreadsbusiness.

Spotify(SPOT,Buy,PT:$650)-TheperceiveddisruptionriskforSPOTcentersonAl_generatedmusicshiftinglisteningtimeandcreatoreconomicsawayfromtheplatform丿eitherviaYouTubeMusic丿sAlfeaturesorAl_nativeappssuchasSuno.WebelievethisriskislimitedbecauseAlcreatorsprioritizemaximumreachandmonetization丿whichstillresideonopenDSPslikeSPOT.SPOT丿smoatisdistributionscaleandcatalogdepth(over70%oflisteningremainscatalog_driven)丿andconsumerswantasingledestinationforbothlegacyandAlmusic.EvenasAllowersbarrierstomusiccreation丿supplyisalreadycommoditized丿sothevalueaccruestoplatformswithdiscovery丿playlists丿dataandmonetization丿whereSPOTisstrongest.SPOThasdurable~15%revand~25%FCF/ShCAGRs丿andseesAlasdriverofimprovedmonetization/engagementratherthanathreat.

Our$650PTisbasedon22xoutFY27FCF/Sh丿andcatalystsaheadincludethe1Qearningsreport(upsideto2QGMguidewouldbepositive)andAnalystDayinMay(potentialAlfeatureannouncementsandrefreshoflong-termtargets/potential40%+L-TGMtarget).

DanFannon-Brokers,AssetManagers&Exchanges

MorganStanley(MS,Buy,PT:$221)-lnvestorsremainfocusedontheriskthatAl-drivenautomationandhowelevatedtechnologyspendcouldcompressmarginsorerodethevalueofhumanadvice丿weighingonsentimentdespiteMS丿sdurablecompetitiveposition.Webelievetheseconcernsareoverstated.MorganStanleybenefitsfromadiversifiedbusinessmixacrosswealthmanagement丿investmentbanking丿trading丿andassetmanagement丿whichprovidesmultipleearningspillarsandreducesexposuretoanysingledisruptionvector.Withinwealth丿MS丿sscale丿brand丿andintegrated

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platformcreatestructuraladvantagesthatAIislikelytoreinforce.ThefirmisanearlyadopterofAIinadvisorenablement,clientengagement,riskmanagementandfirm-wideefficiency,andthesecapabilitiessupportdeeperrelationships,betterproductivityandimprovedconsistencyofservice.AIexpandsadvisorcapacityandenhancesplanningworkflowsratherthanreplacingtheadvisorfunction,whichremainscentraltoclientbehaviorincomplexfinancialdecisions.Astheadviceindustrycontinuestomovetowardholistic,planning-orientedrelationships,MSispositionedtogainshare,andAIactsasanacceleranttotheoperatingleverageembeddedinthemodelratherthanathreattomargins.

MScurrentlytradesat~15xNTMearnings.Our$221pricetargetisbasedona~20xtargetmultipleappliedtoour2026EPSestimate.WeexpectvaluationsupportasinvestorsgainconfidenceincontinuedgrowthacrosswealthandinvestmentmanagementasISGlevelsnormalize,aswellasprogresstowardthefirm’s70%efficiencyratioobjective.Catalystsincludewealthmanagementmarginsmovingtoward30%inthemediumterm,highervolatilitysupportingFICC&equitytradingandsustainedleadershipinkeyinvestmentbankingcategoriesasdealactivityimproves.IncreasingvisibilityintoAI-drivenproductivitygainsandfirm-wideoperatingleverageshouldfurtherreinforcethedurabilityofthelong-termearningstrajectory.

CharlesSchwab(SCHW,Buy,PT:$122)-InvestorfearsaroundAI-drivendisruptionhavesimilarlypressuredSCHW,withconcernsthatautomatedtoolscouldcompresspricingorreducetheneedforintermediatedadviceacrosstheretailandRIAecosystems.WebelievethesefearsunderestimatethecentralityofSchwab’splatformtotheadviceindustryandtheadvantagesthatscaleconfersinanAI-enabledworld.Schwaboperatesattheintersectionofretailbrokerage,RIAcustody,assetmanagementandadvicedelivery,andthesebusinessesgiveituniquedatabreadthandclientreach.ThiscreatesapowerfulfoundationforAI-drivenpersonalization,workflowautomation,riskanalytics,andadvisorenablement.Ratherthandisplacingadvice,AIsupportstheefficiencyandcompetitivenessoftheRIAandretailadvicemodels,strengtheningtheappealofSchwab’splatform.Thefirm’strustedbrand,largeassetbase,andbreadthofproductspositionittobenefitasAIimprovesadvisorproductivityandengagementwhilealsoenhancingclientexperience.Astheindustryshiftstowardmorecomprehensiveplanningandoutcome-orientedadvice,Schwab’sscaleanddistributionfootprintincreaseinstrategicimportance,andAIamplifiestheseadvantagesratherthanunderminingthem.

SCHWcurrentlytradesat~16xNTMearnings.Our$122pricetargetisderivedfroma~21xtargetmultipleappliedtoour2026adj.EPSestimate.Weseevaluationsupportasinvestorengagementremainsconsistent,organicgrowthremainspositiveandclientcashlevelsrelativelysteady.Catalystsincludenetnewassetgrowthinthe+5-7%range,normalizationofbalancesheetdynamicsthatimprovesearningsvisibility,andthematerialization