AI stocks face valuation resets and tests

Recent research and stock-specific updates highlight how artificial intelligence is influencing both operations and valuations across technology, infrastructure and research companies. Analysts and investors are weighing new AI-driven opportunities against concerns over disruption and competitive pressure.

Morningstar’s equity research team reviewed 132 technology and adjacent companies, leading to major changes in economic moat ratings — 37 downgrades and 2 upgrades — and changes to fair value estimates and uncertainty ratings for additional companies. In many cases, the threat of AI prompted moat downgrades, particularly in enterprise software, IT services and payroll.

Morningstar notes that AI could lower barriers to entry and weaken long-dominant firms by eroding competitive advantages. Downgrades included companies such as Workday, Adobe, Salesforce (CRM) and Automatic Data Processing (ADP), where AI was seen as a threat to the application layer or existing business models.

At the same time, some firms are viewed as potential beneficiaries. Semiconductor design software providers like Synopsys are cited as positioned to gain from AI-driven demand, while network effects may help support firms such as Booking Holdings and major stock exchanges.

Cybersecurity companies also appear more insulated. Morningstar upgraded Cloudflare’s moat rating, concluding that AI could increase demand for its services rather than weaken its position.

American Tower’s Edge Data Center completed a pilot with Dispersive Holdings focused on AI and other high performance workloads at the network edge. The trial produced measurable gains in throughput, security and resiliency, including improved failover performance.

The company, best known for its wireless tower portfolio, is using partnerships like this to demonstrate how its infrastructure can support AI workloads closer to end users. Simply Wall St notes that such early-stage pilots may be a step toward broader commercial edge offerings.

For NYSE:AMT, Simply Wall St reports the share price at about US$186.12, roughly 16% below a consensus analyst target of US$216.52, and estimates the stock is trading 30.9% below fair value. Recent 30-day returns of 8.67% suggest positive short-term momentum as the edge and AI narrative develops.

Axon Enterprise issued full-year 2026 revenue growth guidance of 27% to 30% alongside its fourth-quarter and full-year 2025 results. This came after a 30-day share price gain of 27.95%, followed by short-term declines over one and seven days, and more muted one-year returns of 0.63% compared with a 260.45% five-year total shareholder return.

Simply Wall St highlights contrasting valuation views on Axon. Vestra’s narrative assigns a fair value of US$754.00 per share, implying the stock at US$529.97 is 29.7% undervalued, based on a large contracted backlog of US$14.4 billion and assumptions around AI-driven products and cloud adoption. A discounted cash flow model from Simply Wall St instead estimates fair value at US$375.81, indicating the shares could be expensive.

Gartner’s share price has fallen sharply, with a 65.9% decline over one year and a 32.9% year-to-date drop, prompting new scrutiny of its valuation. A discounted cash flow analysis from Simply Wall St suggests an intrinsic value of around US$223.89 per share versus a market price of US$159.06, implying the stock may be about 29.0% undervalued.

Gartner trades on a price/earnings multiple of 15.37x, below the IT industry average of 21.06x. Simply Wall St’s “Fair Ratio” P/E of 27.02x points to potential undervaluation, but narrative scenarios range from a bullish fair value of US$252.78, assuming benefits from AI integration, to a bearish view of US$150.00, which factors in AI-related competition and margin pressure.

QUALCOMM’s (QCOM) share price weakness contrasts with its longer-term positive shareholder returns. At US$135.20, the stock has fallen 25.8% over 90 days and 21.8% year to date, while multi-year returns remain positive. A leading Simply Wall St narrative places fair value at US$300, describing the shares as undervalued.

That Qualcomm (QCOM) narrative cites record first-quarter fiscal 2025 revenue of US$11.7 billion, up 18% year over year, and earnings per share of US$3.41, up 24% year over year. Growth in handset, automotive (up 61% year over year) and IoT (up 36% year over year) segments and US$2.7 billion returned via buybacks and dividends underpin the valuation, while acknowledging risks from handset dependence and alternative AI and connectivity solutions.

Across these cases, AI is both a growth driver and a source of uncertainty. Some companies, such as American Tower and Qualcomm, are being evaluated on their ability to support AI infrastructure, while others like Axon face debate over whether high-growth expectations are already reflected in share prices.

Morningstar’s findings underline that AI can compress economic moats in sectors such as enterprise software, even as select infrastructure and security providers may see strengthened positions. Valuation assessments now frequently hinge on how durable each company’s AI-related advantages and risks appear over the long term.