Top 5 mega-cap AI stocks with upside potential according to WarrenAI

Investing.com -- Large and mega-cap AI stocks continue to dominate market attention, but not all present equal investment opportunities. According to WarrenAI’s analysis, which combines InvestingPro’s Pro Score, fair value metrics, and Wall Street analyst price targets, several key players stand out with significant upside potential despite their already substantial market presence.

1. Micron Technology (NASDAQ:MU) emerges as the clear leader with a compelling 16.2% fair value upside and a "GOOD" Pro score. What truly distinguishes Micron is its remarkable 66.3% analyst target upside—the highest among all stocks analyzed. This dual validation suggests Micron occupies a strategic position in the AI supply chain as the memory cycle shows signs of improvement, potentially offering investors significant growth opportunities. Analysts highlighted that HBM is sold out for the rest of the year and expanding sovereign AI is bullish for the company.

Following better-than-expected quarterly results where fiscal third-quarter revenue grew nearly 50% quarter-over-quarter, Micron Technology saw CFRA raise its price target to $155. The company also launched new data center SSDs, including what it calls the industry’s first PCIe Gen6 drive.

2. Google parent Alphabet (NASDAQ:GOOGL) secures the second position with a "GREAT" Pro score of 3.24. The company shows a positive fair value upside of 7.1% and maintains double-digit analyst upside potential with an average price target of $194.63, indicating Wall Street’s continued confidence in Google’s AI integration and overall business strength. Google recently reported strong Q2 results, with analyst across Wall Street raising their price targets. Analyst at Truist Securites said, "GOOGL’s stronger 2Q results reflect sustained traction across Search, YT and Cloud, and fail to show any adverse impact from rising AI competition or the uncertain macro so far."

In recent developments, Alphabet’s Google launched Deep Think, an advanced problem-solving feature, for its Gemini app Ultra subscribers.

3. NVIDIA (NASDAQ:NVDA), despite its meteoric rise in recent years, presents a mixed picture. While earning an "EXCELLENT" Pro score of 3.86—the highest in the group—NVIDIA shows a negative 12.8% fair value upside, suggesting potential overvaluation. Analyst price targets averaging $178.19 indicate no upside from current levels, reflecting the stock’s already substantial premium. Several analyst, however, still see upside. Just last week, Morgan Stanley (NYSE:MS) raised its price target on NVIDIA to $200. "We remain enthusiastic on the levels of aggregate demand for Blackwell as token growth continues to outpace what Nvidia can ship. Supply bottlenecks will continue to set the pace of growth, but supply is set to improve in the second half, that should accelerate the momentum of EPS revisions," analyst Joseph Moore said.

In recent news, NVIDIA will supply 100,000 GPUs for OpenAI’s first European AI data center, a project known as Stargate Norway.

4. Amazon (NASDAQ:AMZN) holds the fourth position with a "GOOD" Pro score of 2.88. The e-commerce and cloud computing giant shows a positive fair value upside of 5.2% and additional room to grow toward the average analyst price target of $212.54, suggesting the market may still be underappreciating Amazon’s growth potential in AI-driven services. Amazon sold off recently following earnings as AWS growth and margins disappointed. Many analysts were still positive though. TD Cowen raised its price target on Amazon to $255 and raised estimates.

Amazon reported strong second-quarter results, with net sales of $167.7 billion beating consensus estimates.

5. Taiwan Semiconductor Manufacturing Company (NYSE:TSM) rounds out the top five. Despite a negative fair value upside of -1.8%, TSMC’s strong fundamentals and analyst price targets averaging $237.41 position it as a steady backbone of the AI revolution, given its critical role in producing advanced chips that power AI applications worldwide. Barclays (LON:BARC) raised their price target on TSM to $275 following recent earnings, noting it remains a core holding. "Gross margins impressive once again. TSM delivered another quarter of strong growth with c75% of revenue derived from leading edge nodes (N7 and below). Strength across the board suggests some pull-in to us in more consumer-exposed divisions but the FY guidance growth upgrade more than reassures that AI strength continues, with management even suggesting it is ’stronger’ and they are working hard to increase supply to meet demand."

TSMC reported second-quarter earnings that surpassed analyst estimates, driven by strong AI and high-performance computing demand. Consequently, several firms, including Goldman Sachs, Citi, and BofA Securities, raised their price targets on the stock.

These rankings highlight that even among the largest AI-focused companies, significant valuation discrepancies exist, potentially creating opportunities for investors looking to optimize their exposure to the ongoing AI transformation.

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