Artificial Intelligence remains an early-stage opportunity, and Morningstar frames the sector through its Global Next Generation Artificial Intelligence Index. The article notes recent volatility, including a selloff after news about Chinese lab DeepSeek in late January and tariff concerns in April. As of Aug. 15, 2025, the index had returned 26.65% year to date versus 10.23% for the Morningstar US Market Index, underscoring concentrated gains in leading-edge technology names.
To identify buy candidates, Morningstar screened the index for top constituents with Morningstar Ratings of four or five stars that appeared undervalued as of Aug. 15, 2025. The nine highlighted stocks are Microsoft, Alphabet, Taiwan Semiconductor Manufacturing, Tencent Holdings, Alibaba, Adobe, Cognizant Technology Solutions, Baidu, and EPAM Systems. The article summarizes each holding with Morningstar ratings and analyst commentary. Examples include Microsoft, rated four stars with a wide economic moat and described as investing heavily in cloud and generative Artificial Intelligence through its Azure platform and ties to OpenAI; Microsoft was cited as about 13% undervalued relative to Morningstar estimates, though the underlying fair value per share was not stated. Alphabet was described as an AI front-runner trading roughly 14% below Morningstar fair value, and TSMC was the sole pure-play semiconductor on the list, shown as about 22% undervalued and positioned to benefit from sustained AI and high-performance computing demand.
The article also emphasizes thematic coverage and methodology. The index uses four subthemes — generative Artificial Intelligence, AI data and infrastructure, AI software, and AI services — and assigns exposure scores via Morningstar equity analysts. Constituents are weighted by float-adjusted market capitalization with adjustments to ensure meaningful generative Artificial Intelligence exposure, and the index is rebalanced quarterly and reconstituted annually. The piece closes with practical pointers for further research, including reviewing index holdings, Morningstar stock guides, the technology sector page, and the Morningstar investor screener, and directs readers to analyst coverage for deeper reads. Several specific fair value figures were omitted in the source and are not stated in the article.
