5 Undervalued Tech Stocks Poised to Thrive in the AI Revolution

As artificial intelligence (AI) reshapes industries, investors are seeking tech companies with robust competitive advantages, discounted valuations, and clear AI-driven growth catalysts. Morningstar's 2025 analysis highlights a select group of stocks positioned to capitalize on the AI boom. Below, we explore five undervalued tech stocks—Marvell Technology (MRVL), Advanced Micro Devices (AMD), Salesforce (CRM), Taiwan Semiconductor Manufacturing (TSM), and Adobe (ADBE)—that combine strong moats with compelling fair value discounts, making them prime candidates for long-term gains.

1. Marvell Technology (MRVL): The Networking Chip Leader With AI Infrastructure Play

Marvell's dominance in wired networking chips—its second-place market share—provides a narrow economic moat rooted in its expertise in optical and switching technologies. The company is a key beneficiary of AI infrastructure spending, as data centers increasingly adopt advanced chips to handle AI workloads.

Why It's Undervalued:
Marvell trades at 24% below its $90 fair value estimate, offering investors a rare entry point. Its broad portfolio, including custom AI accelerators and optical chips, positions it to capture rising demand for high-speed data processing.

AI Catalyst:
Marvell's leadership in optical interconnects and its partnerships with cloud giants (e.g., AWS and Google Cloud) are driving 29% CAGR growth in AI-related revenue through 2029.

Investment Case:
Buy Marvell for its underappreciated role in AI infrastructure. Its valuation discount reflects near-term concerns, but its long-term moat and secular growth tailwinds justify a 4-star rating.

2. Advanced Micro Devices (AMD): Undervalued Despite AI Hurdles

AMD's x86 CPU dominance and Xilinx acquisitions give it a narrow moat, but its AI ambitions face headwinds from U.S.-China trade tensions. Despite challenges, AMD remains undervalued at 20% below its $120 fair value.

Key Advantages:
- CPU Market Share: Gains in PCs and servers, with a 17% CAGR in top-line revenue through 2029.
- AI Roadmap: New GPUs like the MI350 and MI400 series, paired with its ROCm software ecosystem, aim to carve a niche in AI training and inference.

Risks and Opportunities:
U.S. export restrictions have limited AMD's access to China's AI market, but its $500 billion TAM (total addressable market) by 2028 suggests long-term upside.

Investment Case:
AMD's valuation discount reflects near-term China-related headwinds. However, its x86 leadership and AI progress warrant a hold-to-buy stance for patient investors.

3. Salesforce (CRM): AI-Enhanced CRM Leader With Pricing Power

Salesforce's wide economic moat stems from its entrenched CRM software and high customer retention. Its AI platform, Agentforce, is generating $100 million in annual revenue just two quarters after launch, with potential to quadruple sales over the next two years.

Valuation Edge:
Trading at 17% below its $315 fair value, Salesforce benefits from rising AI adoption in enterprise workflows.

Strategic Moves:
- Data Cloud Acquisition: The $8 billion purchase of Informatica strengthens its data integration capabilities.
- Price Increases: A 6% average hike on enterprise plans funds further AI development.

Investment Case:
Salesforce's AI-driven revenue streams and undervalued stock make it a buy for investors seeking a leader in enterprise software transformation.

4. Taiwan Semiconductor Manufacturing (TSM): The Foundry Powerhouse

TSM's wide economic moat is fueled by its unmatched expertise in manufacturing advanced semiconductors, critical for AI chips. Despite a 22% undervaluation at its $262 fair value, TSM remains a cornerstone of the AI supply chain.

AI's Role:
- Leading-Edge Nodes: TSM's 3nm and 2nm processes enable cutting-edge GPUs for AI training.
- Client Base: Serves AI leaders like NVIDIA, AMD, and Alphabet, which collectively account for over 50% of its AI-related revenue.

Investment Case:
TSM's undervaluation offers a rare chance to invest in a company with irreplaceable technical advantages. Its $500 billion TAM in AI manufacturing ensures sustained demand.

5. Adobe (ADBE): Creativity Meets AI

Adobe's wide moat is built on its creative software ecosystem, now amplified by AI tools like Firefly. The company trades at 29% below its $590 fair value, offering a compelling entry point.

AI Integration:
- Firefly: AI-powered image generation and editing tools have expanded its user base and monetization.
- Enterprise Growth: AI-driven features in Photoshop and Illustrator are boosting enterprise adoption.

Investment Case:
Adobe's valuation discount underestimates its AI-driven innovation. Investors should view dips as buying opportunities.

Investment Strategy and Risks

Buy Signal: All five stocks offer fair value discounts of 17–29%, with Morningstar's 4-star ratings signaling strong long-term potential.

Risks to Consider:
- Geopolitical Tensions: U.S.-China trade policies could disrupt semiconductor supply chains.
- AI Competition: NVIDIA's dominance and software superiority pose challenges for AMD and others.
- Valuation Compression: If AI adoption slows, undervalued stocks may not rebound as expected.

Conclusion: A Portfolio for the AI Era

The AI revolution is not a fad—it's a fundamental shift in technology adoption. Marvell, AMD, Salesforce, TSM, and Adobe combine discounted valuations with moated advantages and clear AI catalysts. Investors should consider diversifying across these names, weighting toward those with the most immediate AI revenue streams (e.g., Salesforce and Marvell) while maintaining exposure to foundational players like TSM.

As Morningstar's analysis underscores, the winners in AI will be those that blend hardware differentiation, software ecosystems, and data scale. These five stocks are primed to deliver outsized returns in the years ahead.