Nvidia among 6 megacaps that Morningstar says are undervalued. See full list

Jul 21, 2026, 09:19:33 AM IST

Megacap stocks underperformed in the first half of 2026 after leading the market over the previous three years. While technology remained the biggest contributor to overall market returns, several of the largest names, including Nvidia delivered weak performance.

ETMarkets.com

Morningstar has a target price of $280 on Nvidia, supported by expectations of strong growth in its AI GPU-based systems through 2026 and 2027. The research firm also sees few signs from major customers to suggest that the global AI infrastructure buildout will slow meaningfully.

AP

Morningstar says Microsoft continues to dominate several of its core markets, including productivity software through Office and PC operating systems through Windows. It also views the company as one of the two clear leaders in the public cloud market.

AP

Morningstar says technology is the second-most undervalued sector and finds the most attractive valuations within software. It notes that the consumer cyclical sector trades at a 9% discount, largely influenced by Amazon, which accounts for 35% of the sector's market capitalisation and is trading at a 15% discount.

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Morningstar expects strong medium-term growth in Broadcom's AI chips, projecting revenue to triple in fiscal 2026 and double again in fiscal 2027. It believes the market is too pessimistic about the long-term growth prospects of these chips and their impact on margins, which it expects to be margin accretive.

iStock

Morningstar says the communication services sector is the most undervalued, trading at a 20% discount. It highlights Meta Platforms as a key contributor, noting that the company accounts for 19% of the sector's market capitalisation and is trading at a 34% discount.

ETMarkets.com

ETMarkets.com