As Tech Stocks Churn, Nvidia and Other Semiconductor Plays Look Cheap

It’s been a bumpy start to the year for artificial intelligence stocks, as anxiety about whether massive investments in AI will pay off permeates markets and weighs on some of the hottest names in the sector.

Semiconductor giant Nvidia NVDA traded flat for most of January, and its shares are still recovering from a major selloff earlier this month. The stock is up 3% for the year so far after climbing 38% in 2025. Other heavy-hitters like Advanced Micro Devices AMD have seen their share prices fall even after posting solid earnings.

But as these stocks struggle for purchase, Morningstar senior equity analyst Brian Colello, who covers the semiconductor industry, says fears of a bubble look overdone. He explains why planned spending on AI by hyperscalers like Meta META and Alphabet GOOGL gives him confidence that momentum in the sector can continue, even as markets become more discerning when it comes to the winners and losers of the AI race and as worries about whether OpenAI can deliver on lofty promises persist.

For Morningstar analysts, the recent selloffs in tech stocks have even left some AI plays, once dogged by investor fears of unsustainably high valuations, looking like bargains. “Tech is selling down,” Colello says. “But if you’re willing to have a bit of a longer-term view—or even just willing to go against the grain—we think there are buying opportunities.”

Top Semiconductor Stock Picks

Nvidia

• Morningstar Rating: ★★★★
• Fair Value Estimate: $240.00
• Economic Moat: Wide
• Morningstar Uncertainty Rating: Very High

“We remain highly pleased with Nvidia’s AI road map. The company continues to innovate in rack-scale AI solutions, expand its library of open-source AI models to support ecosystem development, and advance physical AI solutions, such as autonomous vehicles.”

—Brian Colello after Nvidia’s announcements at CES 2026

**Broadcom **AVGO

• Morningstar Rating: ★★★★
• Fair Value Estimate: $480.00
• Economic Moat: Wide
• Morningstar Uncertainty Rating: High

“Broadcom’s AI chip business is accelerating, and we project even greater astronomic growth over the next two years. We see phenomenal demand for Google’s TPU chip, layering in of new customers, and big incremental orders from existing customers driving immense demand.”

—William Kerwin on Broadcom’s latest earnings report

Advanced Micro Devices

• Morningstar Rating: ★★★★
• Fair Value Estimate: $270.00
• Economic Moat: Narrow
• Morningstar Uncertainty Rating: Very High

“Medium-term concerns about OpenAI’s expansion are still likely an overhang on AMD’s stock, but it appears that the hard work is being done to bring AMD’s MI450 products to OpenAI this year, starting in the third quarter, with meaningful revenue arriving in the fourth quarter.”

—Brian Colello on AMD’s latest earnings report

**NXP Semiconductors **NXPI

• Morningstar Rating: ★★★★
• Fair Value Estimate: $280.00
• Economic Moat: Wide
• Morningstar Uncertainty Rating: High

“We believe the company has a strong position in the automotive, industrial, and mobile end markets through a combination of high customer switching costs and intangible assets. Although the company sells into cyclical industries, the strength of these competitive advantages gives us confidence that it will generate excess returns over the cost of capital over the next decade and beyond.”

—Brian Colello on NXP’s latest earnings report