Like the rest of the technology sector, artificial intelligence companies have experienced an uneven 12 months. After gains in 2025, “anything-but-AI” sentiment led to a selloff in numerous AI-related stocks during the first quarter of 2026. Even as stocks recover, that retreat has left many well-capitalized AI stocks trading at a discount.

“Generative AI remains the largest theme within the sector,” says Morningstar senior equity research analyst Dan Romanoff. “Software firms are developing and incorporating next-generation AI capabilities into their solutions, while cloud providers are introducing new services and scaling capacity, and some semiconductor firms, like Nvidia NVDA, are enjoying surging demand for AI and data center chips.”

Best AI stocks to buy now

To find the best AI stocks, we look to the Morningstar Global Next Generation Artificial Intelligence Index. The AI stocks on this list were among the index’s top constituents and earned Morningstar Ratings of 4 or 5 stars, meaning they were undervalued as of April 20, 2026.

  1. Nvidia NVDA
  2. Microsoft MSFT
  3. Taiwan Semiconductor Manufacturing TSM
  4. Broadcom AVGO
  5. Meta Platforms META
  6. Tencent Holdings TCEHY
  7. Oracle ORCL
  8. Alibaba Group BABA
  9. Adobe ADBE
  10. International Business Machines IBM
  11. Accenture ACN
  12. Snowflake SNOW

Here’s a little more about each of the best AI stocks to buy, including commentary from the Morningstar analyst who covers the stock. All data is as of April 20.

Nvidia

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Very High
  • Industry: Semiconductors

This edition of the best AI stocks to buy opens with Nvidia. Known for being a leading developer of graphics-processing units, Nvidia is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads. Its stock currently looks 22% undervalued relative to our $260 fair value estimate.

Nvidia has a wide economic moat, thanks to its market leadership in graphics processing units, hardware, software, and networking tools needed to enable the exponentially growing market around artificial intelligence. In the long run, we expect tech titans to strive to find second-sources or in-house solutions to diversify away from Nvidia in AI, but these efforts will, at best, only chip away at Nvidia’s AI dominance.

Nvidia’s GPUs run parallel processing workloads, using many cores to efficiently process data at the same time. In contrast, central processing units, such as Intel’s processors for PCs and servers, or Apple’s processors for its Macs and iPhones, process the data of “0’s and 1’s” in a serial fashion. The wheelhouse of GPUs has been the gaming market, and Nvidia’s GPU graphics cards have long been considered best of breed.

More recently, parallel processing has emerged as a near-requirement to accelerate AI workloads. Nvidia took an early lead in AI GPU hardware, but more importantly, developed a proprietary software platform, Cuda, and these tools allow AI developers to build their models with Nvidia. We believe Nvidia not only has a hardware lead but also benefits from high customer switching costs around Cuda, making it unlikely for another chip designer to emerge as a leader in AI training. Nvidia’s expansion into networking has been impressive, allowing customers to cluster AI GPUs together for AI training.

We think Nvidia’s prospects will be tied to the AI market, for better or worse, for quite some time. We expect leading cloud vendors to continue to invest in in-house, while AMD is also working on GPUs and AI accelerators for the data center. However, we view Nvidia’s GPUs and Cuda as the industry leaders, and the firm’s massive valuation will hinge on the pace of AI buildouts in the years ahead.

Microsoft

  • Morningstar Rating: 5 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Medium
  • Industry: Software and Services

Known for its Windows operating systems and Office productivity suite, Microsoft develops and licenses consumer and enterprise software. This AI stock currently looks 30% undervalued relative to our $600 fair value estimate.

Microsoft is one of three public cloud providers that can deliver a wide variety of PaaS/IaaS solutions at scale. Based on its investment in OpenAI, the company has also emerged as a leader in AI. Microsoft has also enjoyed great success in upselling users on higher-priced Office 365 versions, notably to include advanced telephony features. These factors have combined to drive a more focused company that offers impressive revenue growth with high and expanding margins and deepening ties with customers.

We believe that Azure is the centerpiece of the new Microsoft. Even though we estimate it is already an approximately $75 billion business, it is still growing at approximately 30% annually. Azure has several distinct advantages, including that it offers customers a painless way to experiment and move select workloads to the cloud, creating seamless hybrid cloud environments. Since existing customers remain in the same Microsoft environment, applications and data are easily moved from on-premises to the cloud. Microsoft can also leverage its massive installed base of all Microsoft solutions as a touch point for an Azure move. Azure also is an excellent launching point for secular trends in AI, business intelligence, and Internet of Things, as it continues to launch new services centered around these broad themes.

Microsoft is also shifting its traditional on-premises products to become cloud-based SaaS solutions. Critical applications include LinkedIn, Office 365, Dynamics 365, and the Power Platform, with these moves now beyond the halfway point and no longer a financial drag. Office 365 retains its virtual monopoly in office productivity software, which we do not expect to change in the foreseeable future. Lastly, the company is also pushing its gaming business increasingly toward recurring revenues and residing in the cloud. We believe that customers will continue to drive the transition from on-premises to cloud solutions, and revenue growth will remain robust with margins continuing to improve for the next several years.

Taiwan Semiconductor Manufacturing

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Medium
  • Industry: Semiconductors

Taiwan Semiconductor Manufacturing is the world’s largest dedicated chip foundry, with about 70% market share in 2025. Shares of this affordable AI stock are currently trading 14% below our fair value estimate of $428.

Taiwan Semiconductor Manufacturing is the world’s largest dedicated contract chip manufacturer, or foundry, with about 70% market share in 2025. It makes integrated circuits for customers based on its proprietary IC designs. TSMC has long benefited from semiconductor firms around the globe transitioning from integrated device manufacturers to fabless designers. Like all foundries, it assumes the costs and capital expenditures of running factories amid a highly cyclical market for its customers. Foundries tend to add excessive capacity during times of burgeoning demand, which can result in underutilization during downturns that hampers profitability.

The rise of fabless semiconductor firms has supported the growth of foundries, which has in turn encouraged increased competition. However, most of these newer competitors are confined to low-end manufacturing due to prohibitive costs and engineering know-how associated with leading-edge technology. To prolong the excess returns enabled by leading-edge process technology, or nodes, TSMC initially focuses on logic products, mostly used on central processing units and mobile chips, then focuses on more cost-conscious applications. This strategy has been successful, illustrated by the fact that the firm is one of the two foundries still possessing leading-edge nodes while dozens of peers lag.

We note two long-term growth factors for TSMC. First, the consolidation of semiconductor firms is expected to create demand for integrated systems made with the most advanced nodes. Second, the organic growth of artificial intelligence, Internet of Things, and high-performance computing applications may last for decades. AI and HPC play a central role in quickly processing human and machine inputs to solve complex problems like autonomous driving and language processing, which accentuates the need for more energy-efficient chips. Cheaper semiconductors have made integrating sensors, controllers, and motors to improve home, office, and factory efficiency possible.

Broadcom

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: High
  • Industry: Semiconductors

Next on our list of best AI stocks to buy, Broadcom is one of the largest semiconductor companies in the world and has also expanded into infrastructure software. Its semiconductors primarily serve computing, wired connectivity, and wireless connectivity. It has a significant position in custom AI chips to train and run inference for large language models. Shares of Broadcom stock are currently trading 20% below our fair value estimate of $500.

Broadcom is an amalgamation of high-value, differentiated, and moaty chip and software businesses. Put simply, Broadcom is a prolific generator of cash flow. It is a terrific aggregator of firms, big and small. Its ability to acquire and streamline generates strong profits and cash flow, and fuels robust shareholder returns. We laud the company for its execution and operating efficiency, which builds upon its large organic investment and helps it to outperform its end markets organically.

In our view, Broadcom’s networking and custom chip businesses are its strongest and the primary drivers of the company’s wide economic moat and results. We expect it to retain a dominant position in merchant silicon for switching and routing applications, where we see it as best-of-breed for high speeds. We also expect it to hold a formidable position in custom artificial intelligence accelerators, as it benefits from hyperscale cloud vendors building chips to reduce their reliance on Nvidia. We see Broadcom as the key secondary AI compute vendor to Nvidia as hyperscalers further pursue custom silicon to gain performance, save money, and avoid vendor lock-in.

Outside of chips, Broadcom’s software businesses sell virtualization software, mainframe software, and cybersecurity software, and we see its offerings as highly competitive. Broadcom’s focus on strategic large software customers like financial institutions, governments, and large enterprises—where it is deeply embedded—elicits steep switching costs. We also see upselling opportunities with VMware under the firm’s belt.

We expect Broadcom to grow rapidly as a result of its skyrocketing AI chip business. We believe AI is already the primary driver of Broadcom’s results. To us, an investment in Broadcom today is an investment in its AI chip and networking businesses. Outside of AI, we see more moderate growth led by VMware and non-AI networking. We expect acquisitions to still be on Broadcom’s radar, but perhaps with larger, less frequent deals. After the 2023 VMware purchase, we expect the company to focus on deleveraging for a couple of years before tapping the acquisition market again.

Meta Platforms

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: High
  • Industry: Software and Services

Meta Platforms is the largest social media company in the world, boasting close to four billion monthly active users worldwide. Shares of Meta look 21% undervalued compared with our $850 fair value estimate.

We view Meta as the clear winner in social media. The firm’s application lineup, which includes Facebook, Instagram, WhatsApp, and Messenger, has close to four billion monthly active users, giving Meta unmatched scale in the sector.

The firm’s strategy is dual-pronged. On the user side, Meta has leveraged its scale and social media savvy to iteratively improve its product lineup, adding attractive features such as Stories, Reels, and even new products such as Threads. Such improvements/additions not only improve user engagement but also allow Meta to monetize these features/products by layering advertisements onto them.

On the advertising side, Meta allows advertisers of all shapes and sizes to place ads in front of engaged users. The company has benefited greatly from a general shift toward digital advertising within the broader advertising market, with social media advertising gaining a substantial share, especially since the covid-19 pandemic. To bolster its advertising business, Meta has invested heavily to improve its ad-targeting algorithms, allowing it to improve its advertisers’ return on ad spending and increasing its average revenue per user over time.

While the firm’s core business remains advertising, Meta has shown a proclivity to expand beyond its ad-based revenue model by investing heavily in hardware, via Reality Labs, and AI, by investing in its own Llama large language model. While the firm’s investments in Reality Labs have been demonstrably unprofitable, we are more optimistic about Meta’s investments in AI. We believe Meta’s AI investments, especially those aimed at improving the firm’s ad-targeting algorithms, are value-accretive.

Beyond ad-targeting, Meta is also investing in consumer-facing AI, via its Llama chatbot, which is accessible to users across its applications. While a monetization strategy for this chatbot remains elusive in the near term, we believe the firm could drive increased user engagement/time spent by allowing its users access to a chatbot assistant within Meta’s applications.

Tencent

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: High
  • Industry: Software and Services

Among our affordable AI stocks, Tencent looks 35% undervalued compared with our $102 fair value estimate. Tencent holds a prominent position in China’s internet sector, with a diverse portfolio of products and services used daily by a significant portion of the population.

Over the past decade, Tencent has ridden the mobile gaming boom with hits like Honor of Kings and Peacekeeper Elite. Gaming remains its primary monetization engine, contributing an estimated 60% of operating income. With deep insight into gamer behavior and substantial financial resources, Tencent is well-positioned to keep developing high‑quality, durable franchises.

At the same time, Tencent has built a broad ecosystem across advertising, payments, cloud, music streaming, and more. The largest untapped lever sits inside WeChat. As China’s dominant super‑app, WeChat is a uniquely powerful marketing channel, and we expect its monetization to rise steadily—primarily via advertising.

The drivers are straightforward: higher user engagement across Tencent’s properties expands ad inventory; thoughtful increases in ad load lift yield; and AI‑enhanced targeting, powered by WeChat’s data, improves conversion and pricing. Together, these factors support a gradual, durable ramp in WeChat‑led ad revenue.

AI represents a meaningful new growth lever for Tencent. Despite AI chip export restrictions, Tencent’s differentiated approach—allocating GPUs to internal use rather than selling compute like other hyperscalers—allows it to convert AI directly into product and efficiency gains. Because Tencent owns the use cases, it can deploy models where they drive immediate impact. Early results are visible on the advertising side, and the strategy offers greater long‑term visibility.

While games and advertising will remain Tencent’s core revenue drivers, its leading position in financial technology, cloud, and enterprise software offers long-term value creation potential. Given China’s economic scale and widespread digital adoption, Tencent is poised to benefit from these opportunities by transforming its services into substantial revenue streams.

Lastly, Tencent was historically active in external investments, but in recent years has shifted toward buybacks and internal reinvestment. Looking ahead, the low‑hanging fruit in external deals is largely gone; we expect a more selective approach and, consequently, fewer opportunities for outsize returns from strategic investments.

Oracle

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Narrow
  • Morningstar Uncertainty Rating: Very High
  • Industry: Software—Infrastructure

Oracle provides enterprise applications and infrastructure offerings through a variety of flexible IT deployment models, including on-premises, cloud-based, and hybrid. Oracle shares look 19% undervalued compared with our $220 fair value estimate.

The initial success of Oracle Cloud Infrastructure comes from its technological innovation that makes it a flexible and secure alternative to established hyperscalers like Amazon Web Services, Microsoft Azure, or Google Cloud Platform. More recently, OCI’s strong client focus and ability to scale put it squarely at the center of the booming AI ecosystem, leading to skyrocketing bookings with key AI stakeholders such as OpenAI, Meta, and xAI. We believe OCI is on track to become a leading infrastructure provider for AI training and inference workloads; however, Oracle also faces significant challenges in securing the resources, most particularly GPU chips, necessary to deliver the capacity required by its AI customers.

Oracle has long been a major supplier of both relational database systems and enterprise software. The company’s relational database boasts a premium market positioning that offers industry-leading security and stability at a higher price. Although Oracle Database still plays a dominant role in handling some of the world’s most mission-critical data workflows, the company’s dominance in the database industry is gradually fading due to emerging database products more tailored to enterprises’ specialized data workflows. We think Oracle has made substantial progress in modernizing its database offering by bringing multicloud database to other hyperscalers. This is a win-win-win arrangement that benefits Oracle, other cloud providers, and customers simultaneously. As Oracle further expands its portfolio with AI Lakehouse and AI Data Platform, we expect the database to remain an important growth engine for the company.

Oracle is one of the only companies that offers an integrated AI portfolio across data, infrastructure, and software. We think Oracle’s current product lineup is in the best shape it has been in, and the company has the capacity to both retain its traditional on-premises customers migrating to the cloud and acquire new customers. In our view, cloud transition will continue to serve as a tailwind to Oracle’s revenue growth in the coming years.

Alibaba

  • Morningstar Rating: 5 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: High
  • Industry: Software and Services

Alibaba is the world’s largest online and mobile commerce company as measured by gross merchandise volume. Among its many divisions, the China commerce retail division is its most valuable cash flow-generating business. Shares of Alibaba look 46% undervalued compared with our $258 fair value estimate.

Alibaba is losing market share to PDD and Douyin in the China e-commerce business, and we don’t see a quick fix in the near term. Alibaba’s number of annual active consumers in the China retail marketplace was surpassed by PDD in the fiscal year ended March 2021. Meanwhile, Douyin has gained share from Alibaba, especially in the beauty and apparel categories in recent years, and entered the traditional search-based e-commerce space, competing directly with Alibaba. The number of annual active consumers at Alibaba is close to the ceiling in China. Alibaba’s gross merchandise volume to China’s online retail sales of goods ratio was 62% in the year ended March 2023 at Alibaba, down from 72% in the year-ago period. We believe Alibaba’s marketplace monetization rates will decline in the long run, due to a mix shift toward Taobao, which has a lower take rate compared with Tmall, and more competition.

In our view, the Taobao and Tmall marketplaces remain as Alibaba’s core cash flow driver and can support the expansion of AliCloud as well as the firm’s globalization strategy, which offers long-term growth potential. While AliCloud will remain in investment mode in the medium term, downsizing low-margin businesses can drive segment margins higher over time. On globalization, the Alibaba international digital commerce group’s year-on-year revenue growth has been strong recently, thanks to AliExpress’ expanding cross-border business.

We expect Alibaba to return more capital to shareholders and increase its return on invested capital after divestments of noncore investments. We are pleased that Alibaba has upsized its share-repurchase program by USD 25 billion until March-end 2027 to USD 35.3 billion. Management targets to lift ROIC (based on Alibaba’s calculation) from single digits in fiscal 2023 to double digits in the next few years. Alibaba had sizable cash and equivalents and investments of CNY 829 billion on its balance sheet as of December 2023.

Adobe

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Narrow
  • Morningstar Uncertainty Rating: High
  • Industry: Software—Application

Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers. This affordable AI stock looks 35% undervalued to our fair value estimate of $380.

Adobe has come to dominate content creation software with its iconic Photoshop and Illustrator solutions, both now part of the broader Creative Cloud. Over the years, the firm has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation. The 2021 launch of Adobe Express broadens the company’s funnel, as it incorporates popular features of the full Creative Cloud but comes in lower-cost and free versions. The 2023 introduction of Firefly marks an important artificial intelligence solution that should also attract new users and help extend the competitive position of the platform. We think Adobe is properly focusing on bringing new users under its umbrella and believe that converting these users will become more important over time.

CEO Shantanu Narayen provided Adobe with another growth leg in 2009 with the acquisition of Omniture, a leading web analytics solution that is the foundation of the digital experience segment that Adobe has used as a platform to layer in a variety of other marketing and advertising solutions. Adobe benefits from the natural cross-selling opportunity from Creative Cloud to the business and operational aspects of marketing and advertising.

Document Cloud is driven by one of Adobe’s first products, Acrobat, and the ubiquitous PDF file format created by the company and is now a multibillion-dollar business. The rise of smartphones and tablets, coupled with bring-your-own-device and a mobile workforce, has made a file format that is usable on any screen more relevant than ever.

Adobe believes it is attacking an addressable market well in excess of $200 billion. The company is introducing and leveraging features across its various cloud offerings to drive a more cohesive experience, win new clients, upsell users to higher-priced solutions, and cross-sell digital media offerings. We expect M&A will continue to bolster all aspects of Adobe’s portfolio as the company defends against emerging competitors.

International Business Machines

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: Narrow
  • Morningstar Uncertainty Rating: High
  • Industry: Software—Application

International Business Machines is one of the oldest technology companies in the world. It provides software, IT consulting services, and hardware to help business customers modernize their technology workflows. Shares of IBM are currently trading 22% below our fair value estimate of $325.

While IBM has not always converted technological innovation into commercial success in its century-long history, we think the company’s latest effort to reinvent itself by expanding its software business has been successful so far. Many enterprise customers are searching for IT upgrade solutions to their decades-old infrastructure, and IBM’s leadership in hybrid cloud positions itself as a trustworthy partner to preserve legacy IT systems’ stability and security during the modernization process.

We see strong synergies among IBM’s software, consulting, and infrastructure businesses, as it is one of the few major technology companies that provide end-to-end enterprise IT solutions. Customers value the convenience of procuring IT services from IBM’s one-stop shop, especially given that IBM Consulting also supplies third-party enterprise software and cloud services to meet client needs. We think continued expansion of IBM Consulting’s strategic partnerships with third-party vendors should make the company’s consulting services a more attractive offering to customers.

We believe the software segment should remain IBM’s main growth driver. Customers value Red Hat’s enterprise-grade reliability, making hybrid cloud software the fastest-growing category among IBM’s software offerings. IBM already owns a comprehensive portfolio of automation and transaction processing software, and these two categories should continue to benefit from healthy synergies with IBM’s hybrid cloud and infrastructure products. Currently, we don’t view IBM as a leader in the database market. However, strategic acquisitions like the DataStax and Confluent deals announced in 2025 should boost the competitiveness of IBM’s data software over time.

We think IBM’s infrastructure business is still relevant in the cloud era. The latest IBM mainframes can run artificial intelligence-related workloads and serve as a great platform to deploy quantum-based safety features. As quantum computing gradually matures, we look forward to more use cases where customers leverage IBM’s hybrid infrastructure that combines quantum and traditional computing power to solve business challenges.

Accenture

  • Morningstar Rating: 5 Stars
  • Morningstar Economic Moat Rating: Wide
  • Morningstar Uncertainty Rating: Medium
  • Industry: Software and Services

Accenture is a leading IT services firm that provides consulting, system integration, and business process outsourcing to enterprises around the world. This AI stock currently looks 24% undervalued relative to our $255 fair value estimate.

Accenture boasts many different professional services to tackle almost any need an enterprise might have. We view the company as the best-of-breed professional services provider thanks to its prominent reputation, established customer base, and deep technological expertise.

Accenture is the only IT services company that has the capability to deliver end-to-end business solutions. If a brick-and-mortar bank is planning to launch a mobile banking app, Accenture is ready to assist it throughout the entire process, which includes overarching strategy design, IT system integration, custom application development, new service marketing, and digital infrastructure management. Without Accenture, customers need to source different services from several suppliers, potentially leading to project delays and cost overruns. We believe Accenture’s unique capability of providing integrated digital solutions across consulting and managed services boosts the company’s image as a flagship IT services provider and reinforces its customer relationship with Fortune 100 companies.

We think Accenture should fare better than other IT services companies as enterprises introduce artificial intelligence agents into their workforces. AI agents pose tangible threats to lower-end IT services, such as infrastructure management and business process outsourcing, because agents could potentially perform better in handling repetitive, mechanical business processes than the human workforce. But as a premier business services provider, Accenture’s stronghold lies in higher-end services, like consulting and system integration, that require relatively high levels of human input to tailor solutions for customers. While AI agents can reshape customers’ outsourcing practices, we think Accenture is in a good position to ensure that its services stay relevant for clients.

In our view, Accenture should remain the most dominant player in the IT services industry, shaping how enterprises leverage technology to achieve their desired business outcomes. Given its wide geographic and industry coverage, we expect Accenture to deliver stable top-line growth in the long term.

Snowflake

  • Morningstar Rating: 4 Stars
  • Morningstar Economic Moat Rating: None
  • Morningstar Uncertainty Rating: Very High
  • Industry: Software—Application

Our list of the best AI stocks to buy now closes with Snowflake. This affordable AI stock is a fully managed platform that consolidates data hosted on different public clouds for centralized analytics and governance. Shares of Snowflake are 33% undervalued relative to our fair value estimate of $223 per share.

Snowflake is a leading data platform that helps enterprises create a single source of truth out of data stored across various public clouds. By separating computing from storage, Snowflake’s core data warehouse and data lake products provide superior scalability at a lower cost compared with on-premises solutions, aligning the companies’ offerings with the value proposition hyperscalers can offer. We think data platforms like Snowflake have already become one of the must-have tools in the public cloud ecosystem.

Snowflake should see high future revenue growth and outstanding net revenue retention, or NRR, as clients put more data-related work on the platform. Although it is not atypical for fast-growing software companies to have a high NRR, new AI-related data applications should stabilize Snowflake’s NRR at around 120% in the near term. Supporting the open-source Iceberg table format is Snowflake’s initial step to expand its addressable market by allowing users to directly query data stored outside of Snowflake. This move expands the total volume of data Snowflake can access, making it closer to an all-in-one data platform offering.

We expect the high competition across different enterprise data platforms to continue. Leading solutions like Snowflake, Databricks, and Google BigQuery are built on different underlying technologies, and each has its optimized use cases. All products are aiming to become a one-stop shop for enterprises’ data needs. At the moment, we don’t think there is a clear winner among the top data platform solutions, and the intense competition could take a toll on Snowflake’s future margin expansion.