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Artificial intelligence has been a huge theme this year, with investors rushing into many AI-related stocks. Nvidia soared over 200% year to date, and Microsoft around 56%. But not all AI-related stocks are necessarily too expensive to buy right now. Dave Sekera, Morningstar’s chief U.S. market strategist, said he would move to an underweight position on tech stocks now and take profit in overvalued stocks. But he flagged opportunities in two derivative plays on AI that investors can consider. “Not everything in the technology sector is overvalued. While the obvious plays in artificial intelligence have already run up, we see opportunities in those stocks we consider as second derivative plays on AI,” Sekera told CNBC on Wednesday. He named two U.S. stocks: IT services and consulting firm Cognizant Technology and cloud company Snowflake . Cognizant, which provides services to companies that want to adopt AI, is trading at 24% to Morningstar’s fair value estimate, according to Sekera. Its shares are up around 24% year to date. “Most companies aren’t necessarily going to have given the expertise or the financial wherewithal to be able to build out their own AI and train AI models. So I think that’s why they’re going to need to outsource to a company like Cognizant,” Sekera told CNBC’s ” Street Signs Asia ” on Wednesday. Sekera sees a “long term tailwind” for Snowflake, which he said trades at about 18% discount to Morningstar’s fair value estimate. “With Snowflake … in the data center area, I think the people are going to need Snowflake on the data side in order to train those models,” he said. Its shares are up nearly 30% year to date. Sekera isn’t the only one recently bullish on those two stocks. In late October, Citi upgraded Cognizant from neutral to a buy rating, and raised its price target from $70 to $80. As for Snowflake, Barclays in a late November note said it raised its price target for the stock from $183 to $198. — Correction: The headline was updated to accurately reflect that the two stocks mentioned are secondary artificial intelligence plays.
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