Marketing Communication

Expanding AI Footprint Lifts Moat Stocks

10 June 2026

Read Time 9 MIN

Software and cybersecurity earnings showed that AI is broadening demand for enterprise tech, not eroding it, as Moat Indexes rebounded late in the month.

Key Risks:

Equity-market risk; concentration in technology shares; small-/mid-cap volatility; currency fluctuations; integration of sustainability risks may result in certain investments being avoided or divested, which could limit diversification; index methodology risk - this risk means that if the index changes its rules or which companies are included, it could impact how the fund performs. These factors can lead to significant losses, and past rallies may not be repeated. Complete information on all risks is available in the prospectus and in the KID/KIID, which can be accessed free of charge at vaneck.com. Past performance does not predict future returns.

Key Takeaways:

The S&P 500 gained 5.26% in May, but leadership was narrow, with mega-cap tech driving most of the gain.
Quarterly earnings from software and cybersecurity companies countered fears that AI would displace enterprise software.
The Moat Index rose 3.34%, lifted by Fortinet (+60%) and Datadog (+80%) as cybersecurity and software surged.
The SMID Moat Index rose 2.22%, with tech gains offset by weakness in energy and materials.

Index performance is not illustrative of fund performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Fair value estimates and price targets referenced herein are those of Morningstar's equity research team, are subject to change without notice, and do not constitute recommendations or investment advice.

U.S. equities extended their advance in May, with the S&P 500 gaining 5.26% to reach record highs in a second consecutive monthly gain. Leadership remained narrow, as the cap-weighted S&P 500 Index outpaced the S&P 500 Equal Weight Index by more than 2.5% and the Nasdaq Composite rose 8.43%. Technology was again the clear leader, but the rally broadened beyond semiconductors as strong earnings from software and cybersecurity companies eased earlier concerns that artificial intelligence (AI) would erode demand for enterprise software. Energy was the weakest area of the market as crude prices eased. With no Federal Reserve meeting in May, monetary policy stayed in the background after the central bank held rates steady at its late-April meeting.

The Morningstar Wide Moat Focus Index (the “Moat Index”) gained 3.34% in May, again trailing the S&P 500 in a narrow, technology-led market that has favored mega-cap names in recent months. The Index spent much of the month in modestly negative territory, down more than 1% by mid-month even as the benchmark pushed to new highs, before a late-month rally in its software and cybersecurity holdings lifted it into positive territory. Both sector allocation and stock selection weighed on relative performance. The Index’s equal-weighted, valuation-conscious construction limited its exposure to the mega-cap technology names that drove much of the benchmark’s gain, while overweights to lagging defensive sectors added to the shortfall.

The Morningstar US Small-Mid Cap Moat Focus Index (the “SMID Moat Index”) rose 2.22% in May, roughly in line with the S&P MidCap 400’s 2.45% gain and leading the S&P SmallCap 600, which advanced 1.04%. Smaller-cap stocks broadly trailed large-caps during the month, a reversal from April, as narrow large-cap leadership reasserted itself. As with the Moat Index, the SMID Moat Index drew its strongest contributions from technology holdings, particularly software, cybersecurity, and semiconductor names tied to the artificial intelligence infrastructure theme. Sector allocation was a modest tailwind, while stock selection was a slight drag, with weakness among materials holdings offsetting some of the strength in technology. The Index followed a similar intra-month path to its large-cap counterpart, slipping early in the month before rallying in the final stretch.

Software and Cybersecurity Lead Equities Higher in May

Source: Morningstar. Data as of 31/05/2026. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index. Please see index definitions and other important disclosures at the end of this content. Fund performance current to the most recent month end is available by visiting vaneck.com.

Moat Index Highlights: Software and Cybersecurity Strength Amid a Narrow Rally

May was another challenging month for the Moat Index on a relative basis, as both sector allocation and stock selection trailed the S&P 500 during a narrow, technology-led advance. The equal-weighted approach limited the Index’s participation in the mega-cap technology and semiconductor names that led the benchmark, while overweights to defensive sectors weighed further. Even so, the Index was supported by a concentration of strong contributions from software and cybersecurity holdings that capitalized on a broadening of the AI trade beyond semiconductors.

Fortinet Inc. (FTNT) and Palo Alto Networks Inc. (PANW) were among the leading contributors, as cybersecurity names rallied on growing recognition that AI is expanding, rather than shrinking, the market for security. Fortinet shares advanced more than 60% after the company reported strong quarterly earnings results and raised its full-year sales outlook, with management emphasizing that every new AI deployment widens the corporate attack surface and increases demand for protection. Morningstar continues to view Fortinet’s wide moat as supported by customer switching costs and a network effect that strengthens as more threat data flows across its platform. Palo Alto Networks gained approximately 57%, helped by industry developments reinforcing that AI model providers increasingly view large security vendors as partners. Morningstar assigns Palo Alto a wide moat, underpinned by high switching costs across its network, cloud, and security operations platforms, and continues to view the shares as trading below its fair value estimate.

Datadog Inc. (DDOG) and Oracle Corp. (ORCL) led a broader recovery in enterprise software, as strong results eased fears that artificial intelligence would displace traditional software business models. Datadog shares rose more than 80% after the observability software provider reported a strong quarter and pointed to artificial intelligence as an accelerating source of demand for its monitoring tools. Morningstar continues to assign Datadog a wide moat, supported by switching costs and network effects that deepen as more customer data flows through its platform. Oracle advanced roughly 40%, supported by momentum in its cloud infrastructure business and rising demand tied to AI model training and the broader data-center buildout, areas where the stickiness of its database and enterprise software offerings supports durable customer relationships.

Companies detracting the most from Moat Index performance were concentrated in defensive and value-oriented areas of the market that were overlooked during the technology-led advance. Zoetis Inc. (ZTS), an animal health company, was the largest detractor following a sharp decline in its shares. LPL Financial Holdings Inc. (LPLA), a brokerage platform; Constellation Brands Inc. (STZ), a producer of beer, wine, and spirits; Huntington Ingalls Industries Inc. (HII), a defense shipbuilder; and Otis Worldwide Corp. (OTIS), an elevator and escalator manufacturer, also weighed on results. The group spanned health care, financials, consumer staples, and industrials, reflecting the broad rotation away from defensive holdings as investors favored higher-growth technology names.

Moat Index Top Contributors and Detractors - May 2026

Contributors

Company	Ticker	Sector	Avg. Weight (%)	Contribution (%)
Fortinet Inc.	FTNT	Technology	2.60	1.66
Datadog Inc.	DDOG	Technology	1.33	1.16
Palo Alto Networks Inc.	PANW	Technology	1.41	0.80
Oracle Corp.	ORCL	Technology	0.95	0.38
Estée Lauder Companies Inc.	EL	Consumer Staples	2.04	0.33

Detractors

Company	Ticker	Sector	Avg. Weight (%)	Contribution (%)
Zoetis Inc.	ZTS	Health Care	2.46	-0.80
LPL Financial Holdings Inc.	LPLA	Financials	2.56	-0.46
Constellation Brands Inc.	STZ	Consumer Staples	2.76	-0.31
Huntington Ingalls Industries Inc.	HII	Industrials	1.49	-0.22
Otis Worldwide Corp.	OTIS	Industrials	2.34	-0.20

Source: Morningstar. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.

SMID Moat Index Highlights: Technology Leadership Extends Across Market Caps

The SMID Moat Index also drew its strongest contributions from technology, where software, cybersecurity, and semiconductor holdings tied to the AI theme led performance. Sector allocation was a modest tailwind during the month, while stock selection was a slight drag, with weakness among materials holdings the primary offset.

Several of the same software and cybersecurity names that lifted the Moat Index contributed here as well. Datadog Inc. (DDOG), held in both indexes, was the top contributor as its observability platform benefited from accelerating AI-driven demand, and Fortinet Inc. (FTNT) added to gains on the same cybersecurity strength. Akamai Technologies Inc. (AKAM), a distributed network, security, and cloud computing provider, advanced approximately 45% as investors responded to its expansion into AI edge computing, including a multiyear agreement to supply compute capacity to a large AI model developer.

Semiconductor holdings tied to AI infrastructure also contributed meaningfully. Marvell Technology Inc. (MRVL), a repeat top contributor in recent months, advanced more than 20% after raising its growth outlook, with Morningstar pointing to accelerating demand for its custom AI silicon and optical connectivity chips and viewing the shares as undervalued. Morningstar assigns Marvell a narrow moat, supported by intangible assets in networking chip design and customer switching costs. ON Semiconductor Corp. (ON) rose roughly 20% as signs of a cyclical recovery in automotive and industrial chip demand were reinforced by growing exposure to data center power. Morningstar views ON Semiconductor’s narrow moat as supported by a cost advantage in power chips and intangible assets in its automotive image sensors.

Companies detracting the most from SMID Moat Index performance were concentrated in energy and materials, areas pressured by soft commodity prices during the month. Devon Energy Corp. (DVN), an oil and gas producer, extended the weakness among energy names that has persisted as the sector’s geopolitically driven gains earlier in the year unwound. Celanese Corp. (CE) and Albemarle Corp. (ALB), both specialty chemical producers, also declined, alongside Vontier Corp. (VNT), a mobility and industrial technology company, and Oshkosh Corp. (OSK), a specialty vehicle manufacturer. The concentration among commodity-linked and cyclical names reflected the market’s clear preference for technology and growth during the month.

SMID Moat Index Top Contributors and Detractors - May 2026

Contributors

Company	Ticker	Sector	Avg. Weight (%)	Contribution (%)
Datadog Inc.	DDOG	Technology	1.19	1.03
Akamai Technologies Inc.	AKAM	Technology	1.40	0.63
Marvell Technology Inc.	MRVL	Technology	2.24	0.54
Fortinet Inc.	FTNT	Technology	0.66	0.42
ON Semiconductor Corp.	ON	Technology	1.06	0.21

Detractors

Company	Ticker	Sector	Avg. Weight (%)	Contribution (%)
Vontier Corp.	VNT	Technology	1.23	-0.26
Devon Energy Corp.	DVN	Energy	1.60	-0.21
Celanese Corp.	CE	Materials	0.82	-0.18
Albemarle Corp.	ALB	Materials	1.69	-0.17
Oshkosh Corp.	OSK	Industrials	0.79	-0.13

Choose Your Moat Strategy

VanEck’s suite of moat investing strategies is powered by Morningstar’s equity research team, which seeks quality companies trading at attractive valuations. The below ETFs offer access to moat companies across market segments:

VanEck Morningstar US Wide Moat UCITS ETF (MOTU): Seeks exposure to US companies considered by Morningstar’s equity analysts to have durable competitive advantages and appealing valuations.

VanEck Morningstar US ESG Wide Moat UCITS ETF (MOAT): Invests in potentially attractively priced, ESG-filtered US companies identified for sustainable competitive advantages by Morningstar. ESG Screens include exclusion of companies deriving revenues from Controversial Weapons, Civilian Firearms and Thermal Coal as defined by Sustainalytics as well as companies with higher levels of ESG-related risks according to Sustainalytics Estimates. Applying ESG Screens might also cause the investment universe to be limited in size, and the ETF may perform differently compared to non-screened portfolios. Investors should check all the characteristics of the fund before making any investment decision. Relevant disclosures can be found on fund page as well as under this link. The fund does not perceive a sustainable investment objective.

VanEck Morningstar US SMID Moat UCITS ETF (SMOT): Focuses on potentially undervalued US small- and mid-cap companies identified for their possible durable competitive advantages.

VanEck Morningstar Global Wide Moat UCITS ETF (GOAT): Targets high-quality global companies with wide economic moats and potential for long-term growth according to Morningstar.

The ETFs mentioned involve several risks. These include stock market risk (the value of your investment can go up or down), concentration risk (the ETFs may focus on certain sectors or companies and invest in fewer securities than those tracking plain benchmarks), and currency risk (returns can be affected by exchange rate changes).

Additional risks include valuation risk (companies that seem cheap may not perform well), smaller company risk (as smaller firms can be more volatile. Because the ETFs use equal weighting, each company has the same impact on performance, which may lead to different results compared to market-cap-weighted benchmarks. There’s also a chance the ETF doesn’t fully match its index performance (tracking error).

For further information on risks and other important information, please refer to the KID/KIID and the Prospectus of the funds, available at www.vaneck.com before investing.

To receive more Moat Investing insights, sign up to our newsletter.

The source for all performance data points, contributions, and company research is Morningstar Direct, as of 5 June 2026, unless stated otherwise.

IMPORTANT INFORMATION

This is marketing communication.

For investors in Switzerland: VanEck Switzerland AG, with registered office in Genferstrasse 21, 8002 Zurich, Switzerland, has been appointed as distributor of VanEck´s products in Switzerland by the Management Company VanEck Asset Management B.V. (“ManCo”). The representative in Switzerland is Zeidler Regulatory Services (Switzerland) AG, Stadthausstrasse 14, CH-8400 Winterthur, Switzerland. Swiss paying agent: Helvetische Bank AG, Seefeldstrasse 215, CH-8008 Zürich.

For investors in the UK: This is a marketing communication targeted to FCA regulated financial intermediaries. Retail clients should not rely on any of the information provided and should seek assistance from a financial intermediary for all investment guidance and advice. VanEck Securities UK Limited (FRN: 1002854) is an Appointed Representative of Sturgeon Ventures LLP (FRN: 452811), which is authorised and regulated by the Financial Conduct Authority (FCA) in the UK, to distribute VanEck´s products to FCA regulated firms such as financial intermediaries and Wealth Managers.

This information originates from VanEck (Europe) GmbH, which is authorized as an EEA investment firm under the Markets in Financial Instruments Directive (“MiFiD”). VanEck (Europe) GmbH has its registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, and has been appointed as distributor of VanEck products in Europe by the ManCo, which is incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM).

This material is only intended for general and preliminary information and does not constitute an investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision on the basis of this information. All relevant documentation must be first consulted.

The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Information provided by third party sources is believed to be reliable and has not been independently verified for accuracy or completeness and cannot be guaranteed.

VanEck Morningstar US ESG Wide Moat UCITS ETF ("ETF") is a sub-fund of VanEck UCITS ETFs plc, a UCITS umbrella investment company, registered with the Central Bank of Ireland, passively managed and tracking an equity index. The product described herein aligns to Article 8 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector. Information on sustainability-related aspects pursuant to that regulation can be found on www.vaneck.com. Investors must consider all the fund's characteristics or objectives as detailed in the prospectus, in the sustainability-related disclosures or related documents before making an investment decision.

The value of the ETF may fluctuate significantly as a result of the investment strategy. The ETF´s holdings are disclosed on each dealing day on www.vaneck.com under the ETF´s Holdings section and as per PCF under the Documents section and published via one or more market data suppliers. The indicative net asset value (iNAV) of the ETF is available on Bloomberg. For details on the regulated markets where the ETF is listed, please refer to the Trading Information section on the ETF page at www.vaneck.com. Investors must buy and sell units of the UCITS on the secondary market via an intermediary (e.g. a broker) and cannot usually be sold directly back to the UCITS. Brokerage fees may incur. The buying price may exceed, or the selling price may be lower than the current net asset value. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets. Tax treatment depends on the personal circumstances of each investor and may vary over time. The ManCo may terminate the marketing of the ETF in one or more jurisdictions. The summary of the investor rights is available in English at: summary-of-investor-rights.pdf.

Please refer to the Prospectus – in English language - and the KID/KIID - in local language - before making any final investment decisions and for full information on risks. These documents can be obtained free of charge at www.vaneck.com, from the ManCo or from the appointed facility agent. VanEck Morningstar Global Wide Moat UCITS ETF ("ETF") is a sub-fund of VanEck UCITS ETFs plc, a UCITS umbrella investment company, registered with the Central Bank of Ireland, passively managed and tracking an equity index.

VanEck Morningstar US Wide Moat UCITS ETF ("ETF") is a sub-fund of VanEck UCITS ETFs plc, a UCITS umbrella investment company , registered with the Central Bank of Ireland, passively managed and tracking an equity index.

VanEck Morningstar US SMID Moat UCITS ETF ("ETF") is a sub-fund of VanEck UCITS ETFs plc, a UCITS umbrella investment company, registered with the Central Bank of Ireland, passively managed and tracking an equity index.

Morningstar® US Sustainability Moat Focus Index is a trade mark of Morningstar Inc. and has been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar and Morningstar makes no representation regarding the advisability in VanEck’s ETF. Effective December 15, 2023 the carbon risk rating screen was removed from the Index. Effective December 17, 2021 the Morningstar® Wide Moat Focus IndexTM has been replaced with the Morningstar® US Sustainability Moat Focus Index. Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index construction rules. Among other changes, the index increased its constituent count from 20 stocks to at least 40 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover and longer holding periods for index constituents than under the rules in effect prior to this date. It is not possible to invest directly in an index.

The Morningstar® Global Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck’s ETF and bears no liability with respect to that ETF or any security. Morningstar is a registered trademark of Morningstar, Inc. Morningstar Global Wide Moat Focus Index is a service mark of Morningstar, Inc. It is not possible to invest directly in an index.

The Morningstar® Wide Moat Focus Index^SMare service marks of Morningstar, Inc. and have been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation regarding the advisability of investing in the ETF. It is not possible to invest directly in an index.

Morningstar® US Small-Mid Cap Moat Focus Index^SMare service marks of Morningstar, Inc. and have been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation regarding the advisability of investing in the ETF. It is not possible to invest directly in an index.

The S&P 500 Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2020 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. It is not possible to invest directly in an index.

Investing is subject to risk, including the possible loss of principal. For any unfamiliar technical terms, please refer to ETF Glossary | VanEck.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.

Expanding AI Footprint Lifts Moat Stocks

Coulter Regal

Software and Cybersecurity Lead Equities Higher in May

Moat Index Highlights: Software and Cybersecurity Strength Amid a Narrow Rally

Moat Index Top Contributors and Detractors - May 2026

SMID Moat Index Highlights: Technology Leadership Extends Across Market Caps

SMID Moat Index Top Contributors and Detractors - May 2026

Choose Your Moat Strategy

Important Disclosure