The Nasdaq is currently sitting at all-time highs. Thus, there’s no shortage of high-priced tech stocks at the moment. While it’s easy to find tech shares that are high priced, finding untapped gems becomes that much harder.
Tech stocks have soared over the past year as the artificial intelligence era begins. The Magnificent 7 have been the primary beneficiaries of that boom. Their success has pulled up many other tech stocks. However, there are plenty of hidden gems yet to be discovered along with some better known big name firms.
Let’s take a look at seven tech stocks that appear to be oversold values currently.
Alibaba (BABA)
Investors continue to be bearish about Alibaba (NYSE:BABA) stock in early 2024. What was once one of the highest flying Chinese tech stocks is now a little more than a contrarian pick. Well, that’s the prevailing market wisdom regarding the e-commerce giant. It’s also wisdom that investors should ignore.
The Chinese stock market continues to be historically weak. In fact, ETfs Tracking country performance are at Lowe’s last tested in 2011. Investors aren’t particularly keen on Chinese Equity at the moment overall. That said, certain e-commerce competitors of Alibaba, namely PDD Holdings (NASDAQ:PDD), look strong primarily due to Temu.
That has made Alibaba and its shares look even weaker as investors wonder whether it’s time as China’s e-commerce Champion is a thing of the past. That has yet to be determined. What is known at the moment is that Alibaba’s revenues grew by 5% in the most recent quarter.
It remains the leading cloud firm in China. Those factors have started to sway sentiment with several big names establishing positions in Alibaba. The tide is turning in Alibaba’s favor and now is the time to get on board.
Teradyne (TER)
The semiconductor sector is heating up, making Teradyne (NASDAQ:TER) one of the tech stocks primed for a breakout.
Bullishness pervades the sector following news from Taiwan Semiconductor Manufacturing (NYSE:TSM) that it expects sales to increase by 20% in 2024. Teradyne produces testing equipment vital to the industry and it should be pulled up because of the news.
At least, that’s what one would expect. However, Teradyne continues to face a downturn. Its most recent earnings showed revenues declined by 8%. The company continues to forecast weak demand. The reason is simple: market uncertainty. Firms simply don’t have the confidence to assume that the economy will continue to improve. Thus, they are holding back on chip testing equipment purchases for the moment.
What then should give investors any reason to establish a contrarian position? One of the strongest reasons is that Teradyne may have a big opportunity in the US. The company pulled $1 billion worth of equipment out of China due to export controls in 2023. TSM strongly believes that the US chip sector will grow in 2024. Teradyne can make up those losses by pivoting into US strength.
Microchip Technology (MCHP)
Microchip Technology (NASDAQ:MCHP) provides integrated circuits, more specifically, microcontrollers and microprocessors.
Both types of chips contain CPUs with microcontrollers also including memory and power on one integrated chip. That overly technical explanation aside, Microchip Technology is a stock worth considering.
The company is extremely profitable with Margins and Returns on assets and Equity that outpace roughly 95% of competitors in the semiconductor sector. Despite the company’s strong performance, it continues to trade more cheaply than 65% of its competitors based on its price-to-earnings ratio.
The company also released a security oriented chip in late 2023 which makes it more relevant overall. firms everywhere are increasingly concerned about security issues in the AI era. Demand for increased security and connected devices is unsurprisingly increasing because of artificial intelligence.
The company is looking to rebound in 2024 on weaker sales. It is attempting to do so through share buybacks and dividend payouts which is another reason to consider it.
STMicroelectronics (STM)
Investors don’t have to dig deep to find a reason STMicroelectronics (NYSE:STM) stock remains undervalued.
One of STMicroelectronics primary revenue generators is the sale of chips to automotive manufacturers and the broader automotive industry. A big reason then for its current troubles is simply that the electric vehicle industry is going through a downturn. EVs require many more chips than do their internal combustion counterparts, thus resulting in trouble for STMicroelectronics.
There’s a belief that STMicroelectronics is oversold because of skepticism about the EV sector’s recovery. Sales growth is anticipated to continue to slow in 2024 as the sector attempts to move from the early adopter phase into the mass market.
Yet, newer chemistries will continue to drive down the costs of battery production. In turn, that could galvanize a resurgence in growth. Whether or not factors become more positive in 2024 remains to be seen.
STMicroelectronics should keep growing and will break out sooner or later as the tide around electric vehicles shifts again.
SoundHound AI (SOUN)
SoundHound AI (NASDAQ:SOUN) stock increased in price dramatically following news that Nvidia (NASDAQ:NVDA) has invested in the firm.
Nvidia disclosed that it has invested $3.7 million in the company which engages in conversational AI development. It was among the smaller investments Nvidia made with a $76 million investment in a biotech firm and a $147.3 million investment in Arm Holdings (NASDAQ:ARM).
Despite its relatively small size, the disclosure of the investment served to raise SoundHound AI’s share price by more than 60%.
The best time to have been invested in SoundHound AI was clearly prior to the disclosure of the news. Yet, it continues to be a sound investment and is among the leading names in conversational AI. Nvidia’s investment in SoundHound AI strongly suggests that it believes the firm is the leading company in the emergent space.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO)Is another very well known Tech stock to investors. Thus, it’s hard to characterize it as being untapped. further, the company is going through a restructuring that will result in headcount declining by 5%.
The company is dealing with a glut of inventory at the companies it serves. It will take time for those buyers to work through inventory, which will slow down sales at the company. That news sets the stage for a few positive things to happen.
Many companies have moved higher because of restructuring over the past year. It is entirely possible that the markets receive the news positively. Labor costs are the highest expense for firms and in that regard, Cisco Systems just improved.
Another reason to buy Cisco Systems now is the potential for higher dividend yields if shares keep falling. With a dividend yield of over 3%, it’s a strong income choice among tech stocks. The bargain is improving, another reason to consider Cisco Systems now.
Global Payments (GPN)
Global Payments (NYSE:GPN) Is a fintech stock with momentum on its side. The Atlanta-based company just released earnings which were overall quite positive.
Revenues increased by 8%, reaching $2.43 billion in the fourth quarter. Diluted earnings increased by 50% during the same period and the company’s operating margin increased by 2.4%. Clearly there’s a lot to like. The strong results are one of the primary reasons that share prices have increased from $127 to $137 year to date.
CFO Josh Whipple noted that the company’s outlook for 2024 continues to foresee strong momentum though it has been tempered by recent economic uncertainty. That was a nod to headline inflation numbers which continue to confound economists.
Regardless, the fintech opportunity continues to be strong as the traditional finance and banking sector further digitizes in 2024 and beyond. Income investors will also appreciate the fact that Global Payments includes a dividend. That dividend yields a modest 0.75% that will add up over time.
On the date of publication, Alex Sirois 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.
