Nvidia and Alphabet stand out as undervalued tech stocks amid AI-driven growth

The Nasdaq Composite has shed more than 5% of its value in 2026 as investors rotated out of technology despite positive earnings news from major tech companies. The shift has also left a higher share of stocks trading at undervalued levels, with Morningstar noting that the tech sector has the highest percentage of undervalued stocks.

Cause: Tech rotation and undervaluation

Investors have been moving out of the sector even as earnings news remains supportive. Morningstar’s assessment points to a combination of strong earnings growth and weaker stock performance that has pushed valuations lower across parts of the technology market.

Development: Buying opportunities for long-term investors

For investors with available cash, the article highlights two large-cap technology names—Nvidia and Alphabet—as potential long-term buys amid the downturn. It frames the opportunity around both companies’ growth drivers tied to AI.

Nvidia: AI-driven growth outlook

Nvidia’s current trading snapshot in the article includes a price of $188.67 (up 2.59%) and a market capitalization of $4.6 trillion. Other figures cited are a gross margin of 71.07% and a dividend yield of 0.02%.

• Day’s range: $184.32 - $190.00
• 52-week range: $95.04 - $212.19
• Volume: 5.9M; Avg. volume: 179M
• Market cap: $4.6T
• Gross margin: 71.07%
• Dividend yield: 0.02%

The article says Nvidia expects its growth profile to improve this year, citing rapid adoption of “agentic AI” and “physical AI” solutions. On its February earnings call, CFO Colette Kress said that agentic and physical AI applications built on increasingly smarter and multimodal models are beginning to drive financial performance.

Data and market context cited

• Gartner: 60% of brands are expected to deploy agentic AI solutions in marketing by 2028.
• IDC: companies that do not integrate AI agents and generative AI solutions could see a 15% loss in productivity by next year.
• Nvidia: the physical AI market is poised to grow by 10x between 2026 and 2032.

The article links that physical AI expansion to increased demand for computing infrastructure, supporting a more bullish view of Nvidia’s growth prospects.

Alphabet: AI-supported advertising and broader growth

Alphabet is presented as an AI stock tied to a large digital advertising opportunity. The article notes that the “Magnificent Seven” company has used AI to boost its advertising business and cites a Goldman Sachs estimate that the digital ad market could reach $1.4 trillion by the end of the decade, rising from a 2024 range of $488 billion to $650 billion.

In addition, the article states that Alphabet has $403 billion in trailing 12-month revenue and that its growth rate has started to pick up due to AI.

Valuation and business drivers cited

• Digital ad market estimate: $1.4 trillion by the end of the decade (from $488B–$650B in 2024).
• Trailing 12-month revenue: $403 billion.
• Forward earnings multiple: about 26 times forward earnings.

The article also points to Alphabet’s opportunities in cloud computing and custom AI processors as additional long-term growth avenues, concluding that the stock’s roughly 5% drop in 2026 makes it a top tech stock to consider.