The Trump‑Era Rally Keeps Extending, and 2 Stocks Still Look Undervalued

The Trump-era rally is alive, well, and could bring markets to more elevated heights as we move through the summer months. Undoubtedly, not everyone is bullish on stocks at fresh highs, especially since the war with Iran could drag on for some weeks or even months longer. As a potential inflation wave clashes with an AI wave, though, there’s a strong case for both the bulls and bears.

With Michael Burry recently warning that it’s feeling like the lead-up to the dot-com bubble while encouraging profit-taking in tech names that have already had the opportunity to go parabolic, it’s worthwhile to take a more cautious but optimistic approach. Of course, taking profits after parabolic runs is only good practice, especially given the gravitational force that is the reversion to the mean.

While I don’t share Burry’s bearishness, especially regarding AI, I do think that it’s tough to deny that the semis are looking overheated, while some of the Mag Seven names are acting as obvious but still powerful relative value plays.

Alphabet

Alphabet (NASDAQ:GOOG | GOOG Price Prediction) is within 3% of hitting new highs, but the stock still doesn’t seem like anything that’s close to bubbly, not while the price-to-earnings (P/E) multiple stays below 30.0 times, while the company continues monetizing AI in a way that might make the rest of the mega-cap tech heavy spenders look like they’re approaching AI all wrong. While I think AI is a revolutionary opportunity that can mint several winners, I think Alphabet’s pace is starting to get tough to follow.

With frontier-level models under the hood and one of the most talented AI research rosters in the space, I must say I’d rather go with Alphabet and Google DeepMind than even the likes of Anthropic or OpenAI when they go public. Alphabet is using its size to its advantage in a big-time way. And at this pace, it seems like Google is the AI king to beat, especially as it sets its sights on the red-hot semi scene.

With powerful AI-first cybersecurity capabilities of its own, it’ll be interesting to see how Alphabet can one-up the likes of Claude Mythos. If there’s a company that can keep leaping to the front of the pack, it’s Alphabet. The company has already proven it can move quickly to take the lead. Now the big question is whether it can build a big enough lead to realize a bigger chunk of the AI profits to be had from the next phase.

Microsoft

Microsoft (NASDAQ:MSFT) stock might have what it takes to move higher under its own feet, even if the rest of the tech sector drags its feet. The Mag Seven member that once commanded a premium price tag now goes for a discount to the peer group, with shares trading at 24.6 times trailing P/E. I don’t know how long Microsoft stock will stay this cheap. It’s playing from behind, but for how long? In my view, probably not too long, especially as Nadella and company make good of their “Code Red.”

The relationship with OpenAI is quite complicated, to say the least, with a restructuring of deal dynamics, and now, a report that the enterprise giant could bet another $10 billion in the firm. As OpenAI looks to reclaim its throne with GPT-5.5 and beyond, while Microsoft looks to supercharge Copilot and its enterprise agentic AI offering, I think Microsoft’s comeback story could make it one of the better performers in tech come the second half.

Add Azure’s underappreciated growth upside into the equation, and I think Michael Burry might be wise to stick with the proven blue chip while passing on the parabolic movers.