3 Stocks Due for a Major Rally in July

This year is now halfway over, and the market has taken investors on quite the roller coaster ride. 2026 started off flat, declined at the end of March, saw a major rally through June, and then gave up some of its gains to end it. Overall, the S&P 500 is still up 8%, which is a pretty good start to the year, especially considering that its long-term annualized gain is about 10%.

But not all stocks have participated. There are several that either have lost money or haven't risen nearly as much as the data indicates they should have. These stocks are the ones I'm eyeing in July, and I've got three that I think are due for a major rally.

Image source: Getty Images.

Microsoft

We'll start with Microsoft (NASDAQ: MSFT). Its stock has declined more than 20% so far in 2026 -- not the start any investor wants. This performance comes on the back of a rough end to 2025, and Microsoft is well off the all-time high it established last year.

The selling pressure with Microsoft has been intense, and now the stock is down about 30% from its all-time high. In the past decade, that happened only once: at the start of 2023, when the market was convinced that the country was heading into a recession. So that gives you a sense of the bearish sentiment surrounding Microsoft's stock right now.

This sentiment may also be unjustified, as Microsoft is doing well as a business, with revenue rising 18% and diluted earnings per share (EPS) increasing 23% during its last quarter. Microsoft's AI strategy appears to be working as well, as its annual recurring run rate for its AI business topped $37 billion and was growing at a 123% year-over-year pace.

To top things off, Microsoft trades at 19 times projected earnings for fiscal 2027 (which began July 1). That's a dirt cheap price for a top-notch company.

Meta Platforms

Meta Platforms (NASDAQ: META) has had a similarly rough year and is down nearly 20% from its all-time high. This negative stock sentiment is mostly coming from its AI strategy, which doesn't appear to be panning out at the moment. While it has made some improvements to its advertising platform that spans its social media properties -- Facebook, Instagram, Threads, and WhatsApp -- the market isn't impressed.

Even though Meta's revenue grew at a 33% pace during Q1, it still isn't good enough for the market, and the stock is valued at a relatively low level.

META PE Ratio (Forward) data by YCharts

At 17 times forward earnings, Meta's stock is well off the average valuation of a big tech stock and also trading at a deep discount to the broader market. The S&P 500 trades for 21.5 times forward earnings, so this point marks a major discount. I think Meta is also due for a rally, and buying shares now would allow you to participate in it.

Nvidia

Although Nvidia (NASDAQ: NVDA) hasn't lost money for investors in 2026, it isn't enjoying the success investors are used to seeing. It's up only about 3%, but I think its stock is acting like a coiled spring waiting to explode.

It all boils down to a simple fact: The AI data center build-out is far from over. Nvidia is a critical part of that trend, as it supplies the computing units to many AI hyperscalers. Nvidia has informed investors that it expects AI hyperscaler capital expenditures to top $1 trillion next year, up from $650 billion this year. If that's true, then there's a lot more growth ahead for Nvidia, but none of that is priced into the stock.

NVDA PE Ratio (Forward 1y) data by YCharts

Nvidia's shares trade for 21.5 times forward earnings, the same price as the S&P 500. However, when next year's earnings are used, the number tumbles to a mere 15 times earnings. That's a huge bargain for a stock that's telling investors big growth is coming next year, making it a no-brainer buy now.

Keithen Drury has positions in Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.