How the AIQ Score Is Built
The AIQ Score is a composite investment signal built from five factor dimensions that academic research has consistently associated with differentiated long-term equity returns: Momentum, Value, Quality, Risk, and Sentiment. Unlike a single analyst price target or a one-dimensional screening rule, the AIQ Score synthesizes observable data across these five orthogonal lenses simultaneously, weighting them in a way that reflects both the statistical evidence for each factor's persistence and the practical realities of how each factor behaves across market regimes. The result is a daily-updating, 0-100 signal that represents the preponderance of the observable systematic evidence for a stock at the current moment.
Quality vs. Momentum: Two Different Time Horizons
The Quality sub-score is the highest-information single dimension for longer-horizon investors. Quality captures earnings durability, return on invested capital, balance sheet integrity, and free-cash-flow conversion — the dimensions that distinguish a business with durable competitive advantages from one with temporarily elevated earnings. Sustained high Quality scores are the most predictive of long-term compounding; a Quality score collapse before a price decline is one of the strongest leading indicators the model tracks.
The Momentum sub-score, by contrast, is highest-information for shorter-horizon, trend-following applications: it captures whether institutional money flow and price behavior are constructive right now, regardless of the fundamental quality of the underlying business.
The Smart Score (1-10) and Why Both Scores Are Shown
The Smart Score (1-10) is a cross-validated composite that applies different factor weights than the AIQ 0-100 score, providing an independent read on the same underlying data. A Smart Score of 7 or above reflects broad-based constructive evidence across multiple factor dimensions; a score below 4 reflects systematic weakness.
The reason both scores are displayed — rather than just one — is that they sometimes diverge, and divergences are informative: a high AIQ but low Smart Score typically indicates one dimension (often Momentum) is driving the composite while the cross-validated view is more skeptical. That kind of divergence warrants closer inspection before acting.
Why Score History Matters More Than the Current Reading
Score history is as important as the current reading. A stock that has maintained a Quality score above 75 across multiple consecutive months is exhibiting a fundamentally different profile from one that spiked to 75 for a single snapshot. Sustained elevation across multiple factor dimensions — particularly Quality and Risk — is the signature of the kind of business that tends to compound well through diverse market environments.
Conversely, a recent score collapse (a stock that was at 70 six months ago and is now at 40) deserves scrutiny: it may signal genuine fundamental deterioration, or it may signal a temporary momentum trough in an otherwise intact business. Context and the composition of the score change determines which interpretation is more likely.
How to Read Each Sub-Score
| Score | What It Measures |
|---|---|
| AIQ Score (0-100) | Above 70 is broadly constructive. Below 40 indicates systematic weakness across multiple factor dimensions. The number alone is less important than the trend and the composition. |
| Smart Score (1-10) | 7-10 is strong buy territory; 4-6 is hold; below 4 is caution. Confirm against the AIQ Score — consistent signals are more reliable than isolated readings. |
| Momentum sub-score | Reflects recent price behavior relative to market and sector. High momentum indicates current institutional buying pressure; low momentum indicates current selling or disinterest. |
| Quality sub-score | The most forward-looking single sub-score. Earnings durability, ROIC, FCF quality. Persistent high Quality is the strongest predictor of durable long-term outperformance. |
| Risk sub-score (lower = safer) | Captures volatility, drawdown behavior, and beta context. Higher Risk scores indicate elevated uncertainty in current price behavior — size positions accordingly. |
| Value sub-score | Reflects current valuation attractiveness relative to fundamental context. A high-Value, high-Quality combination is the classic quality-at-a-reasonable-price setup that most systematic investors are designed to find. |
| Score history | Watch for sustained elevation vs. spike-and-drop patterns. Stocks that consistently appear above 70 across multiple sessions are more reliable setups than single-day breakouts. |
See It Live on Stock Pages
Every stock page on AlgovestIQ shows the current AIQ Score, Smart Score, and factor sub-scores alongside score history, signal drivers, and regime context. The methodology above applies to every ticker in the system.