With Markets Hitting New Highs and More Upside Ahead, Watch These 5 Undervalued Stocks With Strong Bullish Technical Setups

The S&P 500 and Nasdaq 100 continue to push toward relentless new highs as the AI frenzy remains a dominant market driver, and the breakout pattern we previously highlighted could become increasingly constructive for a new bullish phase. However, several stocks continue to lag the broader benchmark, and some overlooked companies could potentially deliver additional alpha through improving fundamentals and strengthening technical momentum. Here are five names that could surprise investors, with some also emerging as attractive picks for short term options traders.

Walmart (WMT) maintains a strong connection with broader economic conditions. The recent pullback was partially driven by concerns that oil related inflation pressures could weaken consumer sentiment. However, as expectations shift and inflation fears moderate, the retail giant could reestablish its strength. With major indexes breaking to new highs, long term fundamentals may increasingly outweigh near term concerns. From a technical perspective, RSI recently dropped to 18, the lowest level since June 16, 2025, which previously marked an important session low. The stock is also trading near a critical support zone, increasing confidence that a durable bottom may already be forming.

TSMC (TSM) deserves additional attention as AI demand continues accelerating. The foundry leader remains the dominant advanced chip manufacturer globally, and whether investors look at Nvidia, Broadcom, Micron, AMD, or many other semiconductor leaders, a substantial portion of the industry relies on TSMC's manufacturing capacity. The company also maintains growing pricing leverage as demand for AI chips continues climbing. Intel remains a distant challenger, as foundry expansion and advanced process maturity may require substantially more time than investors currently anticipate. Technically, shares have rebounded from recent lows and appear positioned to challenge the prior high near 422. If that breakout occurs, the upside trajectory could strengthen considerably.

MP Materials (MP) offers another compelling setup as President Trump continues pursuing rare earth independence to reduce reliance on China's supply chain dominance. Unlike Intel's recent rally, MP shares only doubled before the government announced a 15% ownership stake in the company, and the stock still trades roughly 34% below peak levels. Given its strategic importance, the current valuation could remain attractive. Technical indicators also point toward improving momentum, with the MA3 crossing above both MA7 and MA10. If shares can decisively clear the psychological resistance area near 73, the outlook could improve further.

Visa (V) carries a somewhat similar economic sensitivity profile to Walmart, although the chart setup appears stronger. The stock continues maintaining a constructive pattern of higher highs and higher lows. MA3 remains close to MA7 while holding above MA10, supporting the bullish structure. The key resistance zone sits near 335, roughly 3% above current levels. If shares break through that level, momentum could accelerate further.

Cerebras Systems (CBRS) remains one of the few semiconductor laggards despite the ongoing AI boom, partially due to valuation concerns following its IPO. The company currently trades near 104 times projected 2025 sales. However, that valuation concern may overlook OpenAI's $20 billion commitment over three years alongside the AWS partnership opportunity. If execution remains on track, annual revenue generation could approach $7.7 billion before accounting for additional Amazon related contributions, potentially bringing the price to sales ratio closer to 6.9 over time. The primary uncertainty remains OpenAI execution risk. However, with AI enthusiasm remaining strong and RSI recently falling to 14, there may be a favorable setup for investors seeking exposure to the next phase of the AI expansion.