Why FICO (FICO) Is Fighting Back Against VantageScore Pressure

Fair Isaac Corporation (NYSE:FICO) is one of the best underperforming tech stocks to buy for a turnaround. FICO has been hit hard by worries that its credit-scoring moat could weaken as the mortgage market opens further to competing models. On April 22, Reuters reported that Fair Isaac shares fell 12% after Fannie Mae and Freddie Mac said they would begin accepting mortgages assessed with VantageScore 4.0, a rival model backed by Equifax, Experian, and TransUnion. The pressure has been severe enough that FICO was still roughly 50% below its 52-week high in mid-May.

The turnaround case, however, received fresh support on May 18, when FICO said an independent Milliman analysis found that FICO Score 10T was more predictive than VantageScore 4.0 for first-time homebuyer mortgage risk. The study covered nearly 20 million mortgages from 2011 through 2023, and FICO said nearly 60 lenders had already signed up for its free-access program to test FICO Score 10T alongside Classic FICO.

Why FICO (FICO) Is Fighting Back Against VantageScore Pressure

The company also gave investors a stronger fundamental backdrop on April 28, reporting fiscal second-quarter revenue of $691.7 million, up 39% year over year. Scores revenue rose 60%, software revenue increased 7%, and FICO raised its fiscal 2026 revenue guidance to $2.45 billion from $2.35 billion.

Fair Isaac Corporation (NYSE:FICO) provides analytics, decision-management software, and credit-scoring products used by lenders, insurers, telecommunications firms, retailers, and other businesses. Its FICO Score remains a major U.S. consumer credit-risk benchmark.

While we acknowledge the risk and potential of FICO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FICO and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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