From Morningstar: 2025-03-27 06:05:00

Artificial intelligence technology is still in its early stages, with a few dominant players. Investors seeking AI stocks can consider companies like Microsoft, Meta Platforms, Taiwan Semiconductor Manufacturing, Tencent Holdings, Alphabet, Adobe, Advanced Micro Devices, Marvell Technology, and Baidu. These companies are part of the Morningstar Global Next Generation Artificial Intelligence Index and are undervalued as of March 21, 2025.

Microsoft, a leader in AI, is priced at a 20% discount to its fair value estimate of $490 per share. The company’s Azure cloud platform, AI investments, and software offerings contribute to its impressive revenue growth and high margins, making it a strong contender in the AI space.

Meta Platforms, the largest social media company globally, is 23% undervalued compared to its fair value estimate of $770 per share. Meta’s strategy encompasses user engagement improvements, ad-targeting enhancements, and investments in hardware and AI, positioning it as a leader in the social media sector.

Taiwan Semiconductor Manufacturing, the world’s largest contract chip manufacturer, is 35% undervalued relative to its fair value estimate of $273 per share. TSMC’s leading-edge technology and focus on AI, IoT, and high-performance computing applications make it a key player in the semiconductor industry.

Tencent Holdings, a prominent player in China’s internet sector, is 28% undervalued based on a fair value estimate of $91 per share. Tencent’s diversified portfolio, strong user base, and investments in AI and advertising technology contribute to its long-term growth potential.

Alphabet, the parent company of Google, is trading 31% below its fair value estimate of $237 per share. Google’s AI investments, focus on search quality, and expansion into cloud computing position it as a leader in various technology verticals.

Adobe, a dominant player in content creation software, is priced 34% below its fair value estimate of $590 per share. Adobe’s suite of software products, including Photoshop and Illustrator, combined with AI solutions like Adobe Express, drive its growth and market leadership.

Advanced Micro Devices, known for its processors and GPUs, is 24% undervalued relative to its fair value estimate of $140 per share. AMD’s expertise in data centers and AI, coupled with strategic partnerships, make it a strong contender in the semiconductor industry.

Marvell Technology, a leader in networking chips and optical technology, is 22% undervalued based on a fair value estimate of $90 per share. Marvell’s focus on generative AI infrastructure and competitive positioning in networking silicon contribute to its growth potential.

Baidu, the largest search engine in China, is 40% undervalued compared to its fair value estimate of $157 per share. Baidu’s initiatives in AI, cloud computing, video streaming, and autonomous driving position it for long-term growth, despite challenges in advertising and content costs.

The Morningstar Global Next Generation Artificial Intelligence Index provides exposure to leading-edge AI technologies across various subthemes, including generative AI, AI data and infrastructure, AI software, and AI services. Companies in the index are selected based on thematic exposure scores and weighted by market capitalization, offering investors a diversified portfolio of AI stocks.



Read more at Morningstar: Best AI Stocks to Invest in Now