AI boom, record valuations and new opportunities: According to an expert, these three stocks are overvalued – and these three could still offer price potential.
• AI boom drives stock valuations to record levels
• Expert names three overvalued stocks to sell
• These alternatives could offer attractive purchasing opportunities
The Morning Filter podcast from the analysis company Morningstar from May 4, 2026 once again provides investors with concrete guidance for a volatile stock market environment. This time the focus is on clearly overvalued stocks for profit-taking as well as undervalued quality stocks with long-term potential. According to Morningstar chief strategist Dave Sekera, the central message remains: “The AI boom continues at full speed”, but at the same time valuation risks are increasingly emerging in individual hype stocks. This results in a clear strategy for investors: take profits selectively and shift them specifically into undervalued assets.
Sell now? According to experts, these three stocks are overvalued
According to the Morningstar podcast, three stocks in particular are currently the clear winners of the AI rally – albeit with highly inflated valuations.
CIENA is particularly in focus. Sekera warns against massive overvaluation. Although CIENA benefits from the strong expansion of fiber optic infrastructure for AI data centers, the valuation reflects an almost perfect growth scenario. Historically, it has also been shown that infrastructure cycles are often followed by over-investment.
According to Morningstar, Sandisk is also one of the clear profit-taking candidates. The memory chip market is currently experiencing a boom in demand from AI data centers, but Sekera warns: “If prices normalize or fall, the stock could fall sharply.” The stock has already risen extremely sharply and is pricing in a permanent imbalance between supply and demand – a classic cyclical risk in the semiconductor sector.
The third stock is IREN, a data center operator focused on Bitcoin and AI. The expert sees this as primarily momentum-driven exaggeration: The business model currently combines “virtually everything that is currently ‘hot'”, but is associated with a high level of uncertainty and no economic moat. Particularly critical: The share is already trading at a significant valuation premium.
Undervalued opportunities: An expert now sees these three stocks as buying opportunities
While many AI-related stocks have performed strongly, Morningstar also identifies three stocks with attractive entry opportunities.
At the forefront are the papers from Google parent Alphabet. According to the podcast, the stock is trading well below its fair value and has one of the strongest economic moats in the market. “Alphabet has four out of five possible moat sources: cost advantages, network effects, switching costs and intangible assets,” emphasizes Sekera. The combination of classic advertising business and AI integration via Gemini as well as the growing cloud business is particularly exciting.
The chemical company Dow is also one of the favorites. Despite the strong price increase this year, the expert sees further potential. The background is supply bottlenecks in the global chemical sector, which are particularly affecting Asian producers. “US companies like Dow don’t have this disadvantage because they have enough of their own oil. This allows them to utilize their facilities more, which improves sales and margins,” the podcast says. There is also a dividend yield of around 3.5 percent.
The third purchase candidate is Lockheed Martin. After an interim price rally, the stock has come back and, according to Morningstar, is trading well below its fair value. The decline offers investors an attractive margin of safety, explains Sekera. Despite the short-term dip in earnings, the long-term trend of increasing defense spending in the USA, Europe and Asia remains intact.
Rotation instead of hype – this is how investors are now positioning themselves correctly
The central tenor of the Morningstar expert podcast “The Morning Filter” is clear: the AI boom has driven many valuations into overheated areas. According to the analyst, infrastructure and semiconductor stocks in particular are already pricing in a perfect future scenario that is difficult to fulfill in the short term.
At the same time, this is exactly how new opportunities arise in undervalued quality companies. While growth fantasy is already heavily priced into stocks like CIENA or Sandisk, companies like Alphabet, Dow and Lockheed Martin continue to offer attractive entry levels with solid business models and long-term growth drivers, according to Morningstar.
For investors, this means: Not every AI winner automatically remains a buy – and not every boring-looking industrial stock has already been exhausted. According to experts, what is crucial is the consistent distinction between short-term market euphoria and sustainable company value.
Bettina Schneider, editorial team at finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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