The tech sector has been hit hard by the market volatility and the uncertain macroeconomic outlook in September 2023. Many investors have been selling their tech stocks. Investors fear that the high valuations are unsustainable and that the growth prospects are dimming. However as the popular saying goes, “be greedy when others are scared.” Not all tech stocks are created equal, and many of which could have been oversold during September’s market rout.
The three tech stocks below feature strong fundamentals, innovative products and a reliable customer base. These stocks also have the possibility to reap investors market-beating returns during times of growing bearish sentiments.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is the undisputed leader in the graphics processing unit (GPU) market, which is essential to gaming, artificial intelligence, cloud computing and autonomous driving. The capability of Nvidia’s GPUs to power language learning models, which help train language-based AI, has driven their unabating demand and popularity. Even an ongoing slump in the semiconductor market has not prevented Nvidia from achieving record beating earnings in 2023. This is due to strong sales growth in server GPUs and AI-powering chips. Furthermore, the graphics card designer also delivered guidance projections well above the expectations of many market analysts. This indicates strong demand for its products across all segments.
Shares have skyrocketed 213.1% year-to-date, ballooning Nvidia’s market capitalization to above the $1 trillion mark. Nvidia’s forward price-to-earnings ratio has come down from the astronomic highs reached early this year. As a result, it is perhaps the best time to place long-term bets on the chipmaker’s shares. As the AI revolution continues, investors can rest assured that Nvidia’s chips will be a part of it.
BYD (BYDDY)
BYD (OTCMKTS:BYDDY) is a Chinese electric vehicle (EV) maker backed by legendary investor Warren Buffett. The company has begun to make waves in the EV industry globally, especially after the company dethroned Tesla in 2022 as the largest EV maker in the world. However, BYD has not stopped there. BYD’s competitive edge actually lies in its vertical integration strategy. This allows it to produce its own batteries, motors and other key components. As a result, BYD reduced costs and increased efficiency as a result of economies of scale. The company plans to play a direct role in supplying battery technologies to the burgeoning electric vehicle sector. They recently ousted LG as the world’s number two EV battery supplier.
There is perhaps not a better time to invest in Chinese stocks, especially when they are sitting at incredibly cheap valuations. BYD is trading at a 22.8 forward P/E multiple, which is much lower than Tesla’s valuation which is trading around 68.8x forward earnings. While recent controversies have hit BYD in the past weeks, particularly a recent European Union probe into the use of subsidies by China’s government, the EV maker has continued with its expansion efforts in Europe and Latin America, underscoring its firm resolve. Investors betting on the broader shift from combustion engine vehicles to electric vehicles, should be betting on BYD.
Manhattan Associates (MANH)
Manhattan Associates (NASDAQ:MANH) is a leading provider of software solutions for supply chain management, inventory optimization and omnichannel commerce. The company initially benefitted from the increased demand for its solutions amid the pandemic-induced supply chain turmoil in 2021 and 2022. In 2021, revenues grew 13.2% Y/Y, while in 2022, top-line growth came in around 15.6% Y/Y. Both of these figures are above Manhattan’s growth rates before the pandemic, which signals the pandemic could have been the catalyst the supply chain software services provider needed to revive sales growth.
Despite supply chain bottlenecks largely being behind us now, retailers and distributors have continued to seek to improve their efficiency, agility, and customer satisfaction. Case in point, Manhattan Associates accelerated top-line growth numbers to above 20% in both the first and second quarters in 2023.
Manhattan Associates’ shares have risen 70.4% since the start of 2023 and could rally even more as investors allocate capital to companies bringing digital transformation to supply chains globally.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
