US Stocks Traded at Record Discounts Amid Mega-Cap Slump
The US stock market is trading at a significant discount, according to Morningstar's latest analysis. As of June 30, 2026, the composite price-to-fair value estimate for over 700 stocks on US exchanges stood at 0.92, indicating an 8% undervaluation. This marks a slight increase from the beginning of the year.
Large-cap stocks have lagged behind in recent months, with mega-cap companies like Apple (AAPL), NVIDIA (NVDA), and Amazon (AMZN) experiencing lower returns than other sectors. Microsoft (MSFT) has also seen significant declines throughout the first half of 2026.
Despite this, no-moat stocks have become even more overvalued, with commodity-oriented tech hardware stocks driving substantial price increases and earnings growth. Micron (MU), SanDisk (SNDK), and Seagate (STX) have risen above Morningstar's valuations due to supply shortages.
Conversely, wide-moat stocks are trading at greater discounts, with AI leaders like NVIDIA (NVDA), Broadcom (AVGO), and Alphabet (GOOG) potentially undervalued in the long term. The market is also overly penalizing software providers for their potential disruption by AI.