7 Undervalued Stocks That Crushed Q1 Earnings
Plus: Three years of the AI stock boom, where to invest now, and moat rating changes.
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Smart InvestorTom Lauricella, chief markets editor 
In this issue:
A huge earnings report from Nvidia in May 2023 helped kick off the artificial intelligence trade, which continues through to this day. We’ve pulled together charts that capture some of the remarkable market trends driven by the AI infrastructure buildout, ranging from astronomical growth in revenues to unicorn valuations flying to the moon. On the topic of flying to the moon, this past week also saw the long-awaited IPO filing from Elon Musk’s SpaceX. We’ve got a trio of articles from our colleagues at PitchBook: a quick take on highlights from the filing, six charts on nuggets ranging from where the companies revenues come from (hint: not space travel) to how much investors stand to rake in, and a close look at what one analyst calls the “reckless” financials at xAI. Stay tuned in the coming weeks for more coverage of what investors need to know before taking the plunge on SpaceX stock. With stocks at their heights and the market driven by the AI boom, where are the opportunities? Morningstar chief US strategist Dave Sekera thinks it’s time to take some profits on some of those hot growth stocks and reallocate to value. Find out more of what he recommends here. Lastly, this week, we updated two regular features. The first is our monthly check for moat rating changes across the US stock coverage list for Morningstar analysts. This time around, we found three moat rating changes, two downgrades, and one upgrade. And with first-quarter earnings largely wrapped up, we screened for stocks that crushed both earnings and revenues and are deemed undervalued by Morningstar analysts. Seven stocks made the list, including two software stocks and a popular social network. As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming data and events. 
Atlassian, Amphenol, and Adient are among the stocks Morningstar analysts say are still cheap despite impressive earnings beats. Bella Albrecht
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Markets and the Economy 
Arm, Birkenstock, and Blackberry rise, while Intuit and electric vehicle manufacturers underperform. Jillian Moore
The growth category, specifically technology and AI stocks, is no longer providing an excess margin of safety. David Sekera
There’s been a period of increased M&A activity in the sector, fueled by growing AI power demands. Jessica Hamlin
The first public financials from Elon Musk’s company highlight Starlink’s revenue power and increased spending on AI. Michael Bodley
Ciena saw a moat upgrade, while CoStar was downgraded. Bella Albrecht
A probe of BlackRock TCP Capital could have implications for an entire industry. Eric Jacobson
The Grok maker’s losses are accelerating, as SpaceX’s IPO pulls back the curtain on a large AI model company’s financials for the first time. Rosie Bradbury, Jacob Robbins
The Middle East conflict is exacerbating the already-challenging task of projecting oil and natural gas prices. Morningstar DBRS Morningstar DBRS
A look at how SpaceX makes money, how it loses money, and what the IPO cashout will look like for key investors and execs. Rosie Bradbury
April PCE inflation data is due, and Costco and Salesforce will report earnings. Jillian Moore
Chart of the Week 
A look at how exploding AI revenues have driven returns, lifted non-tech stocks, added to market concentration, and sent unicorn valuations flying. Tom Lauricella, Rachel Schlueter
Recent Earnings The Tools You Need to Invest Like an Analyst
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