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on July 31, 2026

Morningstar says Nvidia is an 'undervalued' high-upside stock play

William Edwards

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If there's one stock investors have consistently been willing to pay top dollar for over the past several years, it's Nvidia.

But with the stock struggling since mid-May, down 17% amid fears of a decline in hyperscaler spending, Morningstar says it finds itself in an unfamiliar role: an undervalued bargain.

In a July 30 report, Morningstar said the stock's fair value estimate is $280 per share, well below its current level of around $194 per share. Morningstar's estimate implies 44% upside.

The firm's view on Nvidia is driven by a couple of things:

Its wide economic moat, as its GPUs, CUDA software, and other products remain superior to others on the market.
A bullish outlook for revenue growth as hyperscalers continue to spend. Morningstar sees Nvidia posting 80% revenue growth in 2027.

Morningstar's fair value estimates have mostly moved alongside Nvidia's share price since the start of 2023. But the two have begun to diverge since last October.

While Morningstar sees Nvidia as undervalued, it also assigns it a "very high" uncertainty rating.

One concern is that hyperscalers — its top customers — will eventually produce their own AI hardware in-house, Morningstar said. But their products are unlikely to compete with or fully replace Nvidia's.

Another major risk is that hyperscalers pull back on spending to please investors.

Earlier this week, the market seemed to punish Meta for increasing its spending projections and reward Microsoft for staying put on its spending plans (though Meta underperformed earnings estimates and Microsoft beat earnings also played into their respective share price movements).

But Morningtar said it doesn't see a decline in AI infrastructure spending anytime soon.

"Given the high likelihood of strong AI capital expenditures in the near term and medium term (and likely the long term too), we believe Nvidia's growth prospects are underrated," Brian Colello, a senior equity analyst for Morningstar, said in the report.

"The stock looks like a bargain," he added.

William Edwards is a senior investing reporter at Business Insider primarily covering the US stock market and the broader economy.He's interviewed some of the most influential voices in the market, including Joseph Stiglitz, Jeremy Grantham, Rick Rieder, Rob Arnott, Savita Subramanian, Nouriel Roubini, Ken Rogoff, Mike Wilson, Claudia Sahm, Albert Edwards, Andrew Ross Sorkin, Ben Snider, and more.William launched BI's annual Oracles of Wall Street list (2023, 2024, 2025), highlighting top calls from strategists, economists, and analysts. He also writes BI's Where to Invest $10,000 column, and contributes to the First Trade newsletter.Prior to Business Insider, William covered the US economy for Bloomberg News in Washington, DC and contributed to TV tech coverage for CNBC in San Francisco. He has also spent time studying or reporting in France, Germany, and Tunisia.He is based in New York.

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Morningstar says Nvidia is an 'undervalued' high-upside stock play

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