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The Morningstar bullish thesis provides a fundamental floor for MSFT and AVGO, aligning with the "AI Strength" narrative and contrasting against recent sector-specific headwinds like the competitive pressure cited for NVDA. Technically, all three tickers exhibit a bullish MACD crossover while remaining in neutral RSI territory (38-50), suggesting a consolidation phase rather than a momentum breakout; the sub-1.0 volume readings confirm a lack of aggressive institutional conviction despite the positive news cycle. MSFT’s RSI of 38.52 suggests it is closer to oversold territory, making Morningstar's "undervalued" claim a potential catalyst for a mean reversion toward the $385 resistance level. For AVGO, the proximity to its 50-day moving average acts as a critical pivot, where a volume surge above the 1.0x average is required to validate the bullish fundamental outlook. Traders should monitor the $365 support for MSFT and $305 for AVGO as essential stop-loss zones, as the current "Hold/Neutral" status indicates these assets remain vulnerable to broader S&P 500 volatility until sustained buying volume confirms a trend reversal.
The AI trade has been anything but smooth in 2026.
After a strong run, investor sentiment has shifted in recent months. Many artificial intelligence stocks have sold off sharply, and investor anxiety has risen alongside them.
But not every analyst is running for the exits.
Morningstar sees the pullback as a chance to buy well-capitalized AI names at a discount. Two dividend stocks, in particular, are catching their eye: Microsoft and Broadcom.
Both carry wide economic moat ratings from Morningstar, indicating durable competitive advantages.
Both are profitable, growing, and committed to paying shareholders.
And right now, both dividend stocks are sitting at prices that Morningstar believes significantly understate their true worth.
Microsoft: A dividend stock built for the AI era
Microsoft (MSFT) is a Dow 30 stock that pays a quarterly dividend of $0.91 per share, or $3.64 annually, with a current dividend yield of around 0.98%.
The tech stock has raised its dividend for 21 consecutive years, making it one of the most reliable income payers in the technology sector.
Morningstar assigns the stock its highest five-star rating and a $600 fair value estimate, implying the stock is roughly 62% undervalued at current prices.
It also holds a "wide moat" designation and a "medium" uncertainty rating, a combination that signals long-term competitive strength with manageable risk.
The bull case is straightforward. Azure, Microsoft's cloud platform, is already an approximately $75 billion businessgrowing at around 30% annually.
Its investment in OpenAI has also positioned it at the center of the AI arms race.
At the Morgan Stanley Technology, Media & Telecom Conference last month, Microsoft Chairman and CEO Satya Nadella made the case for what he called the "network effects of intelligence": a vision where AI compounds the value of everything Microsoft has already built in its productivity and cloud businesses.
"The next office, which is bigger than all of the offices that came before, may be headless," Nadella said, pointing to AI-powered agents that work on behalf of users without a traditional interface.
For dividend stock investors, that's a meaningful signal. Microsoft's AI ambitions are not a distraction from its core business; they are the core business.
The case for this dividend stock rests on its dominance in custom AI accelerators. Broadcom builds application-specific chips, or XPUs, for some of the biggest names in artificial intelligence.
Its CEO Hock Tan revealed on the company's fiscal first-quarter 2026 earnings call that it now counts six customers for these chips, including Google, Anthropic, Meta, and, starting in 2027, OpenAI.
The numbers are striking.
Broadcom's AI semiconductor revenue surged 106% year over year in fiscal Q1 2026, reaching $8.4 billion.
Management guided for $10.7 billion in AI chip revenue next quarter, a 140% year-over-year jump.
Morningstar sees Broadcom as the most important secondary AI compute vendor after Nvidia, benefiting directly from hyperscalers' push to reduce their dependence on any single supplier.
Its networking chip business, which is growing even faster than its custom accelerators, adds another layer of strength.
The infrastructure software side, anchored by VMware, provides the steady, recurring cash flow that supports the dividend.
The final takeaway
The "anything but AI" mood that has gripped markets in 2026 has left two of the sector's strongest companies looking attractively priced, according to Morningstar.
Microsoft is a low-payout, high-growth dividend stock sitting atop a cloud and AI platform that keeps compounding.
Broadcom operates an AI chip business that's scaling faster than most analysts expected even a few months ago.
Neither dividend stock pays a headline-grabbing yield. But for investors who think in years rather than quarters, both offer something harder to find: durable businesses, rising dividends, and AI tailwinds that may be just getting started.
Morningstar's identification of Microsoft and Broadcom as 'deeply undervalued' provides a constructive outlook for investors during a period of market volatility. The article highlights strong fundamentals, including wide economic moats, dividend growth streaks, and robust AI-driven revenue potential for both firms. For traders, this highlights potential entry points for high-quality technology assets that may have been unfairly punished in the broader AI sector sell-off.
PublishedApril 1, 2026 at 11:03 PM Fresh - Highly Relevant
AI Confidence70%Moderate
ImplicationPotential upside for related securities
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Always consult with a qualified financial advisor before making investment decisions.
