Best AI Stocks to Buy Now

Like the rest of the technology sector, artificial intelligence companies have experienced an uneven 12 months. After gains in 2025, “anything-but-AI” sentiment led to a selloff in numerous AI-related stocks during the first quarter of 2026. Even as stocks recover, that retreat has left many well-capitalized AI stocks trading at a discount.

“Generative AI remains the largest theme within the sector,” says Morningstar senior equity research analyst Dan Romanoff. “Software firms are developing and incorporating next-generation AI capabilities into their solutions, while cloud providers are introducing new services and scaling capacity, and some semiconductor firms, like Nvidia NVDA, are enjoying surging demand for AI and data center chips.”

To find the best AI stocks, we look to the Morningstar Global Next Generation Artificial Intelligence Index. The AI stocks on this list were among the index’s top constituents and earned Morningstar Ratings of 4 or 5 stars, meaning they were undervalued as of May 8, 2026.

1. Nvidia NVDA
2. Microsoft MSFT
3. Alphabet GOOGL
4. Broadcom AVGO
5. Meta Platforms META
6. Alibaba Group BABA
7. Tencent Holdings TCEHY
8. Adobe ADBE
9. Arista ANET
10. International Business Machines IBM
11. Accenture ACN
12. Snowflake SNOW

Here’s a little more about each of the best AI stocks to buy, including commentary from the Morningstar analyst who covers the stock. All data is as of May 8.

Nvidia

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Very High
• Industry: Semiconductors

This edition of the best AI stocks to buy opens with Nvidia. Known for being a leading developer of graphics-processing units, Nvidia is also expanding its data center networking solutions, helping to tie GPUs together to handle complex workloads. Its stock currently looks 17% undervalued relative to our $260 fair value estimate.

Nvidia has a wide economic moat, thanks to its market leadership in graphics processing units, hardware, software, and networking tools needed to enable the exponentially growing market around artificial intelligence. In the long run, we expect tech titans to strive to find second-sources or in-house solutions to diversify away from Nvidia in AI, but these efforts will, at best, only chip away at Nvidia’s AI dominance.

Nvidia’s GPUs run parallel processing workloads, using many cores to efficiently process data at the same time. In contrast, central processing units, such as Intel’s processors for PCs and servers, or Apple’s processors for its Macs and iPhones, process the data of “0’s and 1’s” in a serial fashion. The wheelhouse of GPUs has been the gaming market, and Nvidia’s GPU graphics cards have long been considered best of breed.

More recently, parallel processing has emerged as a near-requirement to accelerate AI workloads. Nvidia took an early lead in AI GPU hardware, but more importantly, developed a proprietary software platform, Cuda, and these tools allow AI developers to build their models with Nvidia. We believe Nvidia not only has a hardware lead but also benefits from high customer switching costs around Cuda, making it unlikely for another chip designer to emerge as a leader in AI training. Nvidia’s expansion into networking has been impressive, allowing customers to cluster AI GPUs together for AI training.

We think Nvidia’s prospects will be tied to the AI market, for betteror worse, for quite some time. We expect leading cloud vendors to continue to invest in in-house, while AMD is also working on GPUs and AI accelerators for the data center. However, we view Nvidia’s GPUs and Cuda as the industry leaders, and the firm’s massive valuation will hinge on the pace of AI buildouts in the years ahead.

Read more about Nvidia here.

Microsoft

• Morningstar Rating: 5 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Industry: Software and Services

Known for its Windows operating systems and Office productivity suite, Microsoft develops and licenses consumer and enterprise software. This AI stock currently looks 31% undervalued relative to our $600 fair value estimate.

Microsoft is one of three public cloud providers that can deliver a wide variety of PaaS/IaaS solutions at scale. Based on its investment in OpenAI, the company has also emerged as a leader in AI. Microsoft has also enjoyed great success in upselling users on higher-priced Office 365 versions, notably to include advanced telephony features. These factors have combined to drive a more focused company that offers impressive revenue growth with high and expanding margins and deepening ties with customers.

We believe that Azure is the centerpiece of the new Microsoft. Even though we estimate it is already an approximately $75 billion business, it is still growing at approximately 30% annually. Azure has several distinct advantages, including that it offers customers a painless way to experiment and move select workloads to the cloud, creating seamless hybrid cloud environments. Since existing customers remain in the same Microsoft environment, applications and data are easily moved from on-premises to the cloud. Microsoft can also leverage its massive installed base of all Microsoft solutions as a touch point for an Azure move. Azure also is an excellent launching point for secular trends in AI, business intelligence, and Internet of Things, as it continues to launch new services centered around these broad themes.

Microsoft is also shifting its traditional on-premises products to become cloud-based SaaS solutions. Critical applications include LinkedIn, Office 365, Dynamics 365, and the Power Platform, with these moves now beyond the halfway point and no longer a financial drag. Office 365 retains its virtual monopoly in office productivity software, which we do not expect to change in the foreseeable future. Lastly, the company is also pushing its gaming business increasingly toward recurring revenues and residing in the cloud. We believe that customers will continue to drive the transition from on-premises to cloud solutions, and revenue growth will remain robust with margins continuing to improve for the next several years.

Read more about Microsoft here.

Alphabet

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium
• Industry: Internet Content and Information

Alphabet is a holding company that wholly owns internet giant Google. The California-based company derives slightly less than 90% of its revenue from Google services, the vast majority of which is advertising sales. This AI stock is trading 7% below our fair value estimate of $433.

We view Alphabet as a conglomerate of stellar businesses. With solutions ranging from advertising to cloud computing and self-driving cars, Alphabet has built itself into a true behemoth, generating tens of billions of dollars in free cash flow annually. While antitrust concerns around Alphabet’s core search business have made headlines, we retain our confidence in Alphabet’s overall strength and foresee the firm remaining at the forefront of a variety of verticals, including search, artificial intelligence, video, and cloud computing.

Alphabet’s core strategy is to preserve its strong advertising business, with the majority of advertising revenue coming from Google Search. To that end, the firm has invested considerably over the years to improve its search capabilities, ensuring that its search engine remains deeply embedded in how hundreds of millions of users access information on the web.

We see the firm’s investments in AI as a continuation of this effort to safeguard its core product, Google Search. We believe that by leveraging generative AI, Google can not only improve its own search quality via features such as AI overviews, but also improve its advertising business by augmenting its ability to target customers with relevant ads.

On the antitrust front, we don’t foresee a material deterioration in Google’s search business resulting from governmental or judicial intervention. While there is a range of possible outcomes depending on what remedial steps are imposed, we think it is likely that Google will maintain its leadership position in search and text-based advertising in the long term.

Beyond search, we have a positive outlook on Alphabet’s cloud computing platform, Google Cloud Platform. We believe increased migration of workloads to the public cloud and an uptick in the deployment and usage of AI are key growth drivers for GCP over the next five years. At the same time, we believe that as GCP scales, it will become a more important part of Alphabet’s overall business, both from a top-line and profitability perspective.

Read more about Alphabet here.

Broadcom

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Industry: Semiconductors

Broadcom is one of the largest semiconductor companies in the world and has also expanded into infrastructure software. Its semiconductors primarily serve computing, wired connectivity, and wireless connectivity. It has a significant position in custom AI chips to train and run inference for large language models. Shares of Broadcom stock are currently trading 14% below our fair value estimate of $500.

Broadcom is an amalgamation of high-value, differentiated, and moaty chip and software businesses. Put simply, Broadcom is a prolific generator of cash flow. It is a terrific aggregator of firms, big and small. Its ability to acquire and streamline generates strong profits and cash flow, and fuels robust shareholder returns. We laud the company for its execution and operating efficiency, which builds upon its large organic investment and helps it to outperform its end markets organically.

In our view, Broadcom’s networking and custom chip businesses are its strongest and the primary drivers of the company’s wide economic moat and results. We expect it to retain a dominant position in merchant silicon for switching and routing applications, where we see it as best-of-breed for high speeds. We also expect it to hold a formidable position in custom artificial intelligence accelerators, as it benefits from hyperscale cloud vendors building chips to reduce their reliance on Nvidia. We see Broadcom as the key secondary AI compute vendor to Nvidia as hyperscalers further pursue custom silicon to gain performance, save money, and avoid vendor lock-in.

Outside of chips, Broadcom’s software businesses sell virtualization software, mainframe software, and cybersecurity software, and we see its offerings as highly competitive. Broadcom’s focus on strategic large software customers like financial institutions, governments, and large enterprises—where it is deeply embedded—elicits steep switching costs. We also see upselling opportunities with VMware under the firm’s belt.

We expect Broadcom to grow rapidly as a result of its skyrocketing AI chip business. We believe AI is already the primary driver of Broadcom’s results. To us, an investment in Broadcom today is an investment in its AI chip and networking businesses. Outside of AI, we see more moderate growth led by VMware and non-AI networking. We expect acquisitions to still be on Broadcom’s radar, but perhaps with larger, less frequent deals. After the 2023 VMware purchase, we expect the company to focus on deleveraging for a couple of years before tapping the acquisition market again.

Read more about Broadcom here.

Meta Platforms

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Industry: Software and Services

Meta Platforms is the largest social media company in the world, boasting close to four billion monthly active users worldwide. Shares of Meta look 28% undervalued compared with our $850 fair value estimate.

We view Meta as the clear winner in social media. The firm’s application lineup, which includes Facebook, Instagram, WhatsApp, and Messenger, has close to four billion monthly active users, giving Meta unmatched scale in the sector.

The firm’s strategy is dual-pronged. On the user side, Meta has leveraged its scale and social media savvy to iteratively improve its product lineup, adding attractive features such as Stories, Reels, and even new products such as Threads. Such improvements and additions not only improve user engagement but also allow Meta to monetize these features/products by layering advertisements onto them.

On the advertising side, Meta allows advertisers of all shapes and sizes to place ads in front of engaged users. The company has benefited greatly from a general shift toward digital advertising within the broader advertising market, with social media advertising gaining a substantial share, especially since the covid-19 pandemic. To bolster its advertising business, Meta has invested heavily to improve its ad-targeting algorithms, allowing it to improve its advertisers’ return on ad spending and increasing its average revenue per user over time.

While the firm’s core business remains advertising, Meta has shown a proclivity to expand beyond its ad-based revenue model by investing heavily in hardware, via Reality Labs, and AI, by investing in its own Llama large language model. While the firm’s investments in Reality Labs have been demonstrably unprofitable, we are more optimistic about Meta’s investments in AI. We believe Meta’s AI investments, especially those aimed at improving the firm’s ad-targeting algorithms, are value-accretive.

Beyond ad-targeting, Meta is also investing in consumer-facing AI, via its Llama chatbot, which is accessible to users across its applications. While a monetization strategy for this chatbot remains elusive in the near term, we believe the firm could drive increased user engagement by allowing its users access to a chatbot assistant within Meta’s applications.

Read more about Meta Platforms here.

Alibaba

• Morningstar Rating: 5 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Industry: Software and Services

Alibaba is the world’s largest online and mobile commerce company as measured by gross merchandise volume. Among its many divisions, the China commerce retail division is its most valuable cash flow-generating business. Shares of Alibaba look 46% undervalued compared with our $258 fair value estimate.

Alibaba is losing market share to PDD and Douyin in the China e-commerce business, and we don’t see a quick fix in the near term. Alibaba’s number of annual active consumers in the China retail marketplace was surpassed by PDD in the fiscal year ended March 2021. Meanwhile, Douyin has gained share from Alibaba, especially in the beauty and apparel categories in recent years, and entered the traditional search-based e-commerce space, competing directly with Alibaba. The number of annual active consumers at Alibaba is close to the ceiling in China. Alibaba’s gross merchandise volume to China’s online retail sales of goods ratio was 62% in the year ended March 2023 at Alibaba, down from 72% in the year-ago period. We believe Alibaba’s marketplace monetization rates will decline in the long run, due to a mix shift toward Taobao, which has a lower take rate compared with Tmall, and more competition.

In our view, the Taobao and Tmall marketplaces remain as Alibaba’s core cash flow driver and can support the expansion of AliCloud as well as the firm’s globalization strategy, which offers long-term growth potential. While AliCloud will remain in investment mode in the medium term, downsizing low-margin businesses can drive segment margins higher over time. On globalization, the Alibaba international digital commerce group’s year-on-year revenue growth has been strong recently, thanks to AliExpress’ expanding cross-border business.

We expect Alibaba to return more capital to shareholders and increase its return on invested capital after divestments of noncore investments. We are pleased that Alibaba has upsized its share-repurchase program by $25 billion until March-end 2027 to $35.3 billion. Management targets to lift ROIC (based on Alibaba’s calculation) from single digits in fiscal 2023 to double digits in the next few years. Alibaba had sizable cash and equivalents and investments of CNY 829 billion on its balance sheet as of December 2023.

Read more about Alibaba here.

Tencent

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Industry: Software and Services

Among our affordable AI stocks, Tencent looks 41% undervalued compared with our $102 fair value estimate. Tencent holds a prominent position in China’s internet sector, with a diverse portfolio of products and services used daily by a significant portion of the population.

Over the past decade, Tencent has ridden the mobile gaming boom with hits like Honor of Kings and Peacekeeper Elite. Gaming remains its primary monetization engine, contributing an estimated 60% of operating income. With deep insight into gamer behavior and substantial financial resources, Tencent is well-positioned to keep developing high‑quality, durable franchises.

At the same time, Tencent has built a broad ecosystem across advertising, payments, cloud, music streaming, and more. The largest untapped lever sits inside WeChat. As China’s dominant super‑app, WeChat is a uniquely powerful marketing channel, and we expect its monetization to rise steadily—primarily via advertising.

The drivers are straightforward: higher user engagement across Tencent’s properties expands ad inventory; thoughtful increases in ad load lift yield; and AI‑enhanced targeting, powered by WeChat’s data, improves conversion and pricing. Together, these factors support a gradual, durable ramp in WeChat‑led ad revenue.

AI represents a meaningful new growth lever for Tencent. Despite AI chip export restrictions, Tencent’s differentiated approach—allocating GPUs to internal use rather than selling compute like other hyperscalers—allows it to convert AI directly into product and efficiency gains. Because Tencent owns the use cases, it can deploy models where they drive immediate impact. Early results are visible on the advertising side, and the strategy offers greater long‑term visibility.

While games and advertising will remain Tencent’s core revenue drivers, its leading position in financial technology, cloud, and enterprise software offers long-term value creation potential. Given China’s economic scale and widespread digital adoption, Tencent is poised to benefit from these opportunities by transforming its services into substantial revenue streams.

Lastly, Tencent was historically active in external investments, but in recent years has shifted toward buybacks and internal reinvestment. Looking ahead, the low‑hanging fruit in external deals is largely gone; we expect a more selective approach and, consequently, fewer opportunities for outsize returns from strategic investments.

Read more about Tencent here.

Adobe

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High
• Industry: Software—Application

Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers. This affordable AI stock looks 33% undervalued to our fair value estimate of $380.

Adobe has come to dominate content creation software with its iconic Photoshop and Illustrator solutions, both now part of the broader Creative Cloud. Over the years, the firm has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation. The 2021 launch of Adobe Express broadens the company’s funnel, as it incorporates popular features of the full Creative Cloud but comes in lower-cost and free versions. The 2023 introduction of Firefly marks an important artificial intelligence solution that should also attract new users and help extend the competitive position of the platform. We think Adobe is properly focusing on bringing new users under its umbrella and believe that converting these users will become more important over time.

CEO Shantanu Narayen provided Adobe with another growth leg in 2009 with the acquisition of Omniture, a leading web analytics solution that is the foundation of the digital experience segment that Adobe has used as a platform to layer in a variety of other marketing and advertising solutions. Adobe benefits from the natural cross-selling opportunity from Creative Cloud to the business and operational aspects of marketing and advertising.

Document Cloud is driven by one of Adobe’s first products, Acrobat, and the ubiquitous PDF file format created by the company and is now a multibillion-dollar business. The rise of smartphones and tablets, coupled with bring-your-own-device and a mobile workforce, has made a file format that is usable on any screen more relevant than ever.

Adobe believes it is attacking an addressable market well in excess of $200 billion. The company is introducing and leveraging features across its various cloud offerings to drive a more cohesive experience, win new clients, upsell users to higher-priced solutions, and cross-sell digital media offerings. We expect that mergers and acquisitions will continue to bolster all aspects of Adobe’s portfolio as the company defends against emerging competitors.

Read more about Adobe here.

Arista Networks

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High
• Industry: Computer Hardware

Arista Networks is a networking equipment provider that primarily sells Ethernet switches and software to data centers. Shares of this affordable AI stock are currently trading 25% below our fair value estimate of $190.

We view Arista Networks as the technology leader in high-speed switching for enterprise networking. We expect Arista to maintain its high market share at the highest speeds and for it to augment its share in lower speeds and campus applications where it has historically been less penetrated. In our view, Arista’s software gives it a structural and durable competitive advantage over competitors in winning new customers, both in the cloud and in the enterprise. We believe this software-led approach provides the firm with a wide economic moat.

Arista’s performance at high speeds and its software-led approach set it apart from other networking equipment providers. Its Extensible Operating System, or EOS, gives customers a highly programmable and modular solution that can scale up and down for networks of any size. Arista has foregone the proprietary hardware-plus-software lock-in approach of Cisco in favor of utilizing cutting-edge merchant silicon and focusing on software development, which allows the firm to offer top-tier performance at a competitive price point. We think its software focus has generated significant intangible assets and embeds it deeply with customers.

We believe Arista will see durably high growth from surging spending toward artificial intelligence. AI networks require the highest speeds available to train and infer upon models using many GPU clusters talking to each other. We believe Arista’s strong position in high-speed switching will make it a meaningful beneficiary of AI spending. We forecast AI to become a primary driver for the firm over the next five years.

Arista is looking to expand from its high-speed cloud heritage into the larger (and in our opinion, slightly stickier) enterprise market. Arista first established itself in the most cutting-edge applications for hyperscalers, but we believe its modular software approach will prove attractive for smaller enterprises building out private clouds or on-premises data centers. Finally, we expect Arista to maintain an excellent profit profile, even with a robust research and development budget maintaining its intangible assets and its ability to exact pricing power.

Read more about Arista here.

International Business Machines

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium
• Industry: Software and Services

International Business Machines is one of the oldest technology companies in the world. It provides software, IT consulting services, and hardware to help business customers modernize their technology workflows. Shares of IBM are currently trading 12% below our fair value estimate of $260.

While IBM has not always converted technological innovation into commercial success in its century-long history, we think the company’s latest effort to reinvent itself by expanding its software business has been successful so far. Many enterprise customers are searching for IT upgrade solutions to their decades-old infrastructure, and IBM’s leadership in hybrid cloud positions itself as a trustworthy partner to preserve legacy IT systems’ stability and security during the modernization process.

We see strong synergies among IBM’s software, consulting, and infrastructure businesses, as it is one of the few major technology companies that provide end-to-end enterprise IT solutions. Customers value the convenience of procuring IT services from IBM’s one-stop shop, especially given that IBM Consulting also supplies third-party enterprise software and cloud services to meet client needs. We think continued expansion of IBM Consulting’s strategic partnerships with third-party vendors should make the company’s consulting services a more attractive offering to customers.

We believe the software segment should remain IBM’s main growth driver. Customers value Red Hat’s enterprise-grade reliability, making hybrid cloud software the fastest-growing category among IBM’s software offerings. IBM already owns a comprehensive portfolio of automation and transaction processing software, and these two categories should continue to benefit from healthy synergies with IBM’s hybrid cloud and infrastructure products. Currently, we don’t view IBM as a leader in the database market. However, strategic acquisitions like the DataStax and Confluent deals announced in 2025 should boost the competitiveness of IBM’s data software over time.

We think IBM’s infrastructure business is still relevant in the cloud era. The latest IBM mainframes can run artificial intelligence-related workloads and serve as a great platform to deploy quantum-based safety features. As quantum computing gradually matures, we look forward to more use cases where customers leverage IBM’s hybrid infrastructure that combines quantum and traditional computing power to solve business challenges.

Read more about International Business Machines here.

Accenture

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium
• Industry: Software and Services

Accenture is a leading IT services firm that provides consulting, system integration, and business process outsourcing to enterprises around the world. This AI stock currently looks 29% undervalued relative to our $255 fair value estimate.

Accenture boasts many different professional services to tackle almost any need an enterprise might have. We view the company as the best-of-breed professional services provider thanks to its prominent reputation, established customer base, and deep technological expertise.

Accenture is the only IT services company that has the capability to deliver end-to-end business solutions. If a brick-and-mortar bank is planning to launch a mobile banking app, Accenture is ready to assist it throughout the entire process, which includes overarching strategy design, IT system integration, custom application development, new service marketing, and digital infrastructure management. Without Accenture, customers need to source different services from several suppliers, potentially leading to project delays and cost overruns. We believe Accenture’s unique capability of providing integrated digital solutions across consulting and managed services boosts the company’s image as a flagship IT services provider and reinforces its customer relationship with Fortune 100 companies.

We think Accenture should fare better than other IT services companies as enterprises introduce artificial intelligence agents into their workforces. AI agents pose tangible threats to lower-end IT services, such as infrastructure management and business process outsourcing, because agents could potentially perform better in handling repetitive, mechanical business processes than the human workforce. But as a premier business services provider, Accenture’s stronghold lies in higher-end services, like consulting and system integration, that require relatively high levels of human input to tailor solutions for customers. While AI agents can reshape customers’ outsourcing practices, we think Accenture is in a good position to ensure that its services stay relevant for clients.

In our view, Accenture should remain the most dominant player in the IT services industry, shaping how enterprises leverage technology to achieve their desired business outcomes. Given its wide geographic and industry coverage, we expect Accenture to deliver stable top-line growth in the long term.

Read more about Accenture here.

Snowflake

• Morningstar Rating: 4 Stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High
• Industry: Software—Application

Our list of the best AI stocks to buy now closes with Snowflake. This affordable AI stock is a fully managed platform that consolidates data hosted on different public clouds for centralized analytics and governance. Shares of Snowflake are 32% undervalued relative to our fair value estimate of $223 per share.

Snowflake is a leading data platform that helps enterprises create a single source of truth out of data stored across various public clouds. By separating computing from storage, Snowflake’s core data warehouse and data lake products provide superior scalability at a lower cost compared with on-premises solutions, aligning the companies’ offerings with the value proposition hyperscalers can offer. We think data platforms like Snowflake have already become one of the must-have tools in the public cloud ecosystem.

Snowflake should see high future revenue growth and outstanding net revenue retention, or NRR, as clients put more data-related work on the platform. Although it is not atypical for fast-growing software companies to have a high NRR, new AI-related data applications should stabilize Snowflake’s NRR at around 120% in the near term. Supporting the open-source Iceberg table format is Snowflake’s initial step to expand its addressable market by allowing users to directly query data stored outside of Snowflake. This move expands the total volume of data Snowflake can access, making it closer to an all-in-one data platform offering.

We expect the high competition across different enterprise data platforms to continue. Leading solutions like Snowflake, Databricks, and Google BigQuery are built on different underlying technologies, and each has its optimized use cases. All products are aiming to become a one-stop shop for enterprises’ data needs. At the moment, we don’t think there is a clear winner among the top data platform solutions, and the intense competition could take a toll on Snowflake’s future margin expansion.

Read more about Snowflake here.

What Is the Morningstar Global Next Generation Artificial Intelligence Index?

The Morningstar Global Next Generation Artificial Intelligence Index provides exposure to leading-edge AI technologies, including generative AI and adjacent products and services.

The index derives its constituents from the Morningstar Global Markets Index, which represents 97% of the investable market capitalization of developed and emerging markets globally. Companies must be covered by Morningstar’s equity research analysts and have a score of 1 or higher for at least one of the defined subthemes to be eligible for index inclusion.

The four subthemes, as identified by the Morningstar Equity Research Next Generation Artificial Intelligence Committee, are:

Generative AI: This involves the creation of original content. Large language models, such as ChatGPT, are a type of generative AI model that focuses on producing humanlike text.

AI Data and Infrastructure: This encompasses the various technological components needed to manufacture, design, maintain, host, support, and improve AI models. These include semiconductors and data center infrastructure.

AI Software: This includes enterprise and consumer software that incorporates AI models to enhance the user experience and/or improve efficiency.

AI Services: This includes consultancies and outsourced business process companies, which may aid businesses in implementing AI.

Through a standardized scoring process conducted by Morningstar equity analysts, companies are assigned thematic exposure scores for each subtheme. Companies ranked in the top 50 are eligible for inclusion. The index constituents are weighted by float-adjusted market cap. However, the weightings are adjusted, if necessary, to ensure at least 80% of the index is allocated to stocks with meaningful exposure to generative AI. The index is rebalanced quarterly and reconstituted annually.

The Best AI Stocks: More Ideas to Consider

Investors who would like to extend their search for the top AI stocks can do the following:

• Review the holdings of the Morningstar Global Next Generation Artificial Intelligence Index to investigate further.
• Explore the pointers in Morningstar’s Guide to Investing in Stocks to develop and improve your stock-picking strategies.
• Stay up to date on the tech sector’s performance, key earnings reports, and more with Morningstar’s technology sector page.
• Use the Morningstar Investor screener to build a short list of AI stocks to research and watch.
• Read the latest news about notable AI stocks from Morningstar senior analyst Dan Romanoff.