2 Top Undervalued EV Stocks to Watch Now
As tariffs cast a shadow of uncertainty across global markets, global consumers and investors alike may be wondering about the impacts on electric vehicle stocks and manufacturers. Concerns abound surrounding cost increases on imported parts, a depleted EV inventory, potential supply-chain disruptions, and uncertainty about future US tax credits for EVs.
Against this backdrop of uncertainty, we highlight two stocks integral to EV vehicle design that analysts believe are currently trading at a discount to their respective fair values and possess wide moats: $Analog Devices(ADI)$ and $NXP Semiconductors NV(NXPI)$ . Wide moat designations are awarded to companies that Morningstar believes will maintain durable competitive advantages.
The Largest EV Stocks in Morningstar’s EV Index
We found these companies by examining the US Electric & Autonomous Vehicles Index, which launched on July 8, 2021. This benchmark, part of the broader Thematic family, aims to provide “thematically pure exposure to US companies well positioned to benefit from electric vehicles and autonomous driving technologies” by drawing on Morningstar equity research.
As of April 30, 2025, the index was composed of 21 constituents, with most equities concentrated across just three sectors: technology (53.05%), consumer cyclical (26.02%), and basic materials (16.3%). Although the index generally follows an equal weighting scheme, at the end of April, EV manufacturer $Lucid Group Inc(LCID)$ was the highest weighted constituent at 6.02%, ranking just above the world’s biggest electrical connector supplier TE Connectivity TEL at 5.69% and automotive signal and power solutions provider Aptiv APTV at 5.64%.
Amid the uncertainty, EV stocks have lagged the broader market. As of April 30, 2025, the Morningstar US Electric & Autonomous Vehicles Index was down 13.49% for the year to date, trailing the negative 5.19% return for the Morningstar US Market Index. Over the past year, investors saw a negative 13.38% return for the Morningstar US Electric & Autonomous Vehicles Index, which was over 20 percentage points lower than the Morningstar US Market Index’s return of 11.51%.
Over the longer term, the EV stock index’s five-year annualized return is 11.78%, below the Morningstar US Market Index’s 15.18%.
Two Undervalued Wide-Moat US EV and AV Stocks
$Analog Devices(ADI)$
Morningstar Economic Moat Rating: Wide
Price/Fair Value: 0.93
Morningstar Rating: 4 stars
Sector: Technology
Analog Devices is a leading global manufacturer of mixed-signal and analog chips. Analog chips function by translating environmental conditions like temperature and sound into viable digital signals. The company supplies chips to a diverse range of end markets, including automotive companies, as well as manufacturers of medical devices, robots, and industrial machinery. In both fiscal 2022 and 2023, the adjusted operating margin for the firm hit 49%, though it has since declined to 41% in fiscal 2024. Morningstar anticipates, however, that the adjusted operating margin for Analog Devices could reach 50% by fiscal 2028, bolstered by a projected 9% average annual growth in sales. Considering Morningstar’s current fair value estimate of $245 per share, projections for fiscal 2025 are in line with a 3% free cash flow yield.
In recent coverage of Analog Devices, Morningstar equity strategist Brian Colello wrote, “We believe ADI has a wide economic moat because of its proprietary analog designs and high customer switching costs; since analog chips are neither particularly expensive nor do they require cutting-edge manufacturing techniques, high-quality analog chipmakers tend to retain design wins as the end product is being built, all while maintaining healthy pricing and strong profitability over time. An especially promising end market for the firm is the automotive sector. Semis are required to enable the sensors, active safety systems, and advanced infotainment systems added to cars today. Electric vehicles have even more chip content per car, and ADI is well-positioned, with a market share lead in battery management systems for electric vehicles.”
At a recent $226.68 per share, Analog Devices was trading at a 7% discount to Morningstar’s fair value estimate.
$NXP Semiconductors NV(NXPI)$
Morningstar Economic Moat Rating: Wide
Price/Fair Value: 0.76
Morningstar Rating: 4 stars
Sector: Technology
NXP Semiconductors is a prominent player among automotive semiconductor manufacturers. Like Analog Devices, the firm’s expertise is not limited solely to automotive chipmaking, as it also sells to the mobile, communications infrastructure, and industrial markets. Moreover, through enabling near-field communication, or NFC, NXP Semiconductors powers the mobile wallet offerings of multiple high-profile clients, the likes of which include $Alphabet(GOOG)$ and $Apple(AAPL)$ . Although the firm lost 5.0% in revenue in 2024 and Morningstar models an 8.5% decrease in revenue this year amid tariff-related market challenges, Morningstar anticipates a recovery by 2026. Indeed, Morningstar models indicate that NXP Semiconductors’ revenue could increase 6% in 2026 as EV designs call for an increasing proportion of chips embedded into their systems. Morningstar’s fair value estimate for NXP Semiconductors currently sits at $280 per share, indicating a 6% free cash flow yield for 2025.
“We believe the company has a strong position in the automotive, industrial, mobile, and communications infrastructure markets through a combination of high customer switching costs and intangible assets,” Colello wrote. “Although the company sells into cyclical industries, the strength of these competitive advantages gives us confidence that it will generate excess returns over the cost of capital over the next decade and beyond. The merger of Freescale and the former NXP in 2015 led to a powerhouse in automotive semiconductors, which makes up more than half of the company’s total revenue. Like many of its chipmaking peers, NXP is well-positioned to benefit from safer, greener, smarter cars in the years ahead. It is among the market leaders in automotive semis, especially in microcontroller units, or MCUs, which serve as the brains of a variety of electronic functions in a car.”
At a recent $212.40 per share, NXP Semiconductors was trading at a 24% discount to Morningstar’s fair value estimate.
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