What is alternative data and why does it matter for investing?

Alternative data refers to information gathered from non-traditional sources outside of regular financial statements and market data. This includes satellite imagery of retail parking lots, consumer spending patterns from credit card transactions, web traffic data, and social media sentiment. These data sources can provide early signals about company performance or market trends before they appear in official financial reports, potentially giving investors an informational advantage.

How do these companies make money from data?

Alternative data providers generate revenue through several business models. Some sell access to unique datasets through subscriptions or licensing agreements. Others build analytics platforms that transform raw data into actionable insights for specific industries. Some companies use proprietary data to power their own decision-making in areas like lending or insurance. Infrastructure providers in this group make money by offering the computing power and storage needed to process massive datasets.

What is the connection between AI and alternative data companies?

Artificial intelligence and alternative data have a symbiotic relationship. AI algorithms need vast amounts of diverse data to learn patterns and make predictions, creating demand for the datasets these companies provide. Simultaneously, these companies use AI to process and extract insights from enormous volumes of unstructured information like satellite images, text, or transaction records. As AI adoption grows across industries, the demand for high-quality alternative data increases, potentially benefiting companies in this group.

What risks should I be aware of when investing in alternative data providers?

Key risks include regulatory changes around data privacy (like GDPR in Europe), which could limit data collection or increase compliance costs. Competition is intense, with barriers to entry falling as technology advances. Data quality issues or security breaches can damage reputation and lead to customer loss. Additionally, as certain alternative datasets become widely available, their value in generating unique insights may diminish. Like all tech-oriented sectors, rapid technological change can quickly make existing products obsolete.

How might changing privacy regulations affect these companies?

Evolving privacy regulations could significantly impact alternative data providers. Stricter rules may limit what data can be collected, how it's processed, and how long it can be stored. Companies might face higher compliance costs and potentially lose access to valuable data sources. However, these challenges could also benefit established players with strong compliance frameworks and alternative data collection methods. The most resilient companies will likely be those that can adapt by focusing on anonymized data, developing synthetic datasets, or creating privacy-preserving analytics techniques.

15 handpicked stocks

Alternative Data Providers

Discover companies that collect and analyze unconventional data to create market advantages. These carefully selected stocks represent firms turning satellite imagery, web data, and consumer transactions into valuable insights that can lead to better investment decisions.

Han Tan | Market Analyst

Published on June 17

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

FactSet Research Systems Inc.

FDS

Current price

$281.88

FactSet is a premier provider of integrated financial information and analytical applications for investment professionals, acting as a key data sourc...

FactSet is a premier provider of integrated financial information and analytical applications for investment professionals, acting as a key data source.

TransUnion

TRU

Current price

$73.51

TransUnion provides consumer credit information and data analytics, a key form of alternative data for lenders and other businesses.

Equifax Inc.

EFX

Current price

$232.35

Equifax offers consumer and commercial data solutions used by businesses for decision-making, fitting the alternative data theme.

Innodata Inc

INOD

Current price

$87.41

Open Lending Corp

LPRO

Current price

$0.85

Upstart Holdings, Inc.

UPST

Current price

$52.88

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+89.35%

≈

About This Group of Stocks

Our Expert Thinking

These companies represent the new frontier of financial intelligence. They're creating value by collecting and analyzing non-traditional data sources that provide insights before they show up in financial statements. This emerging sector leverages technology to transform raw data into predictive market signals.

What You Need to Know

This collection spans the full data value chain—from infrastructure providers that store and process information to analytics platforms that deliver actionable insights. The growth of artificial intelligence has created surging demand for diverse datasets, positioning these companies at the intersection of tech and finance.

Why These Stocks

We've selected leaders across the alternative data ecosystem—established data vendors, fintech platforms using proprietary data for lending decisions, and essential infrastructure providers. These companies were handpicked based on their innovation in transforming unconventional information sources into market intelligence.

Group Performance Snapshot

89.35%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 89.35% over the next year.

12 of 15

Stocks Rated Buy by Analysts

12 of 15 assets in this group are rated Buy by professional analysts.

3.1%

Group Growth

This group averaged a 3.1% return last month.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🔍

See What Others Miss

These companies specialize in finding hidden patterns and insights in data before they become obvious to the market, potentially giving their investors an edge.

🚀

AI's Rising Demand

The explosion of artificial intelligence has created a massive need for the alternative data these companies provide, potentially driving growth for years to come.

💡

Tomorrow's Market Intelligence

As traditional data becomes commoditized, these companies are creating the next generation of investment insights, positioning them at the forefront of financial technology.

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