2 Undervalued Semiconductor Stocks to Buy While the Market Is Skeptical of AI Growth

On the Sept. 14, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discuss why there is opportunity in Nvidia NVDA and Broadcom AVGO today. Here is an excerpt from the show.

Why We Expect Nvidia to Keep Growing

Susan Dziubinski: It is time for Dave’s stock picks of the week. This week, Dave’s picks are those seven undervalued mega-cap stocks that he referred to at the top of the show. We’ve talked about most of these stocks before, but we’re still going to go through each of them one by one, starting with Nvidia. Give us the highlights.

David Sekera: Nvidia is a 4-star-rated stock, trades at a 30% discount, not much of a dividend, only a half of a percent yield. We rate the company with a Very High Uncertainty, but we do assign a wide economic moat based on switching costs and intangible assets.

Dziubinski: Now, Dave, walk us through Morningstar’s expectations for Nvidia because the market seems to be a little bit more bearish on the stock than we are.

Sekera: I think this is going to be the same story that you’re going to hear on a lot of the AI stocks. I think the market is definitely giving the company for the amount of growth that they’re projecting here in the short term for the rest of the year and even for 2027. But as you noted, I think the market is very leery of giving the company the credit for 2028 and thereafter.

So, taking a look at our forecast for fiscal year 2027, which is what we’re in right now, we’re looking for revenue to be a little bit above $400 billion. That’s a 74% growth rate. We’re looking for earnings of almost $9.50 a share. That would be up almost 100% versus last year. And that puts the stock right now at 23 times, which is not necessarily a very expensive multiple.

In this case, we are looking for that ongoing growth in 2028. We’re looking for revenue of a little bit over $700 billion. That’d be another 70% increase in the top line, a little bit of operating margin expansion. We’re looking for earnings to grow 76% to $16.61 per share. And then from there we do dial our expectations back a bit. In fiscal 2029, we reduce our growth rate to 15%, and we continue to step it down from there. But in this case, I don’t think the market’s giving them really any credit for 2028. If they get anywhere near our earnings projection for 2028, the stock’s only trading at 13 times 2028 earnings. And I think that’s just indicative of the market not giving credit for that high growth past 2027, not only for Nvidia, but a lot of these other AI stocks.

Why AVGO Is Among the Most Undervalued AI Stocks Today

Dziubinski: Your next big stock pick is Broadcom, and I think this is the most undervalued one of the bunch that we’re talking about today. Give us the highlights on it.

Sekera: Yeah. Broadcom, one of the very few 5-star-rated stocks out there, almost a 45% discount to our long-term intrinsic valuation, seven-tenths of a dividend yield. Now, of course, it’s a tech stock. We rate it with a High Uncertainty, but we do have a wide economic moat rating based on switching costs and intangible assets.

Dziubinski: Broadcom recently reported earnings. The stock pulled back a bit afterward. Morningstar held its fair value estimate at $650. So, talk a little bit about earnings specifically and then what Morningstar’s expectations are for Broadcom.

Sekera: Well, and I just have to reiterate what you said before: I mean, not only is this really one of the most undervalued stocks here, but when I look across all of our AI plays, this is pretty much the most undervalued one altogether and probably the one that I think we have the most differentiated view from the marketplace. Now, interestingly, the stock did sell off after earnings. We maintained our fair value at $650 per share.

In my mind, it was a strong quarter, strong guidance. We just think the market’s probably overconcerned about Alphabet GOOGL multisourcing TPUs from other vendors. The market’s really concerned whether or not that’s going to erode Broadcom’s business over time, but that’s not what we see. If you look at the specific TPUs that Broadcom is manufacturing for Alphabet, these are much higher volume than what they’re outsourcing to others. And even more importantly, they’re a higher complexity than what’s being outsourced to others. Again, a lot of other people don’t necessarily have the technology to be able to manufacture those high-complexity chips yet.

So, again, we still think that is really much more about multisourcing than it is about trying to replace. In this case, using management guidance, our forecast is for 67% in revenue growth for 2027 and 2028. Our five-year compound annual growth rates for revenue and earnings are 46% and 53%, respectively. So, huge growth rates here, based on our 2027 earnings expectation for 2027 of $18.85 per share trades at 19 times. We’re looking at $30 in earnings in 2028, only trading at 12 times. So, if this company performs anywhere near what our forecasts are, trading at some very low market multiples today.

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