Investing in AI? Here Are 6 Undervalued Stocks for Buy-and-Hold Investors

Excitement over artificial intelligence is spurring a once-in-a-generation tech spend.

Why it matters: Nvidia counts several of its Magnificent Seven pals as customers buying its sophisticated AI chips. And the world’s most valuable company says it could earn even more if geopolitical tensions between the US and China eased. But investors are debating whether the market is experiencing an AI boom or AI bubble. How should buy-and-hold investors think about investing in AI—are there any undervalued stocks left today? Dave Sekera is chief US market strategist at Morningstar Research Services and co-host of The Morning Filter podcast.

6 Questions on Investing in AI

1. Welcome back to Investing Insights, Dave. Nvidia recently wrapped up the Magnificent Seven’s earnings season showing AI spending is still strong. What does this mean for the tech-driven stock market rally?
2. Do you think investors’ expectations for these mega-cap names are unreasonably high? Why or why not?
3. Nvidia NVDA is sitting at the center of a geopolitical rivalry between US and China. The company says they didn’t sell its sophisticated AI chips to China in the previous quarter, and that a $50 billion opportunity exists. What do you make of this bottleneck and its impact?
4. Many market watchers are divided over whether the current environment is an AI boom or AI bubble. Can you talk about Morningstar’s outlook?
5. How should buy-and-hold investors think about investing in artificial intelligence?
6. What are the most undervalued AI stocks right now?

Key Quote on Investing in AI

I think really the theme for probably even, like, the end of this year, but certainly for 2026, is going to be looking for which companies out there are going to be able to take AI, and we’re starting to see some companies do this today, incorporate that into their existing products and services, add economic value so they can start charging more revenue, grow their own top line utilizing AI.

Then also those companies that can take AI, incorporate that into their own business practice, so that way they can get more efficiencies, more productivity, be able to generate higher operating margins. So I think that’s really going to be the next wave of companies that investors are even searching for today to try and invest in, those that can actually utilize AI over the course of the future.

6 Undervalued Stocks for Investing in AI

What’s Undervalued: These narrow- and wide-moat firms fall into one of the three camps: hardware, software/hyperscalers, and AI beneficiaries. Morningstar analysts have rated these stocks either 3 or 4 stars:

• Taiwan Semiconductor Manufacturing Co Ltd ADR TSM
• Marvell Technology Inc MRVL
• ASML Holding NV ADR ASML
• Microsoft Corp MSFT
• Salesforce Inc CRM
• ServiceNow Inc NOW

More From Morningstar on Investing in AI

Nvidia’s meteoric rise is showing no signs of slowing down, according to Morningstar senior equity analyst Brian Colello. Morningstar has lifted its fair value estimate for the wide-moat tech firm to $190 from $170 and maintained its Very High Morningstar Uncertainty Rating. Meanwhile, Marvell’s long-term outlook looks promising, writes Morningstar senior equity analyst William Kerwin. The market is undecided about whether the chip designer will grow its customer base, while Morningstar remains confident that it will.

Morningstar editor Tori Brovet and equity analysts examine which companies stand to benefit as AI evolves in The Best AI Stocks to Buy Now. Susan Dziubinski, Morningstar investment specialist and co-host of The Morning Filter podcast, writes about which Magnificent Seven stocks have the most exposure to the AI investing theme.

Coming up: Learn about the new Morningstar Medalist Ratings for semiliquid funds during a live webinar on Morningstar’s YouTube channel on Wednesday, Sept. 10. CEO Kunal Kapoor and ETF and Passive Strategies Research Director Bryan Armour will discuss what investors should know about private assets and the first funds to earn the new rating on the Investors First series.