Some stocks have been sitting on the sidelines amid this hot AI-driven market rally. Only time will tell when the market’s gains will broaden and help the year-to-date (YTD) losers; value-focused investors have a lot to love about the “left-behind” cohort. AI works its magic in more than just firms building AI models or GPUs powering them. In this piece, we’ll look at three mostly misunderstood tech stock laggards to buy,
Far too many folks are quick to discount or dismiss AI plans entirely. Of course, nobody wants to play from behind when it comes to next-generation technologies, like generative AI. However, it’s much better to play late than not at all.
Let’s check out three YTD tech losers I wouldn’t count out yet. Maybe, just maybe, one of them can be the tortoise that eventually overtakes the many hares in the tech scene!
Tesla (TSLA)
Tesla (NASDAQ:TSLA) stock seems to be rolling down a steep hill at full speed, with shares plunging 7% on Monday’s flat-ish day for broader markets. Year to date, TSLA stock is down almost 25%. That’s a drastic decline in just north of two months. And while electric vehicles (EVs) are the hot tech trend of yesteryear, this sell-off could prove a buying opportunity for those with the pain tolerance to buy the dip.
It’s hard to believe, but Tesla stock has shed around 54% of its peak value. As EV sales hit a speedbump, investors should keep their sights on the road ahead, not the rear-view mirror. The company is working hard on advancing its battery tech, self-driving capabilities and Tesla Dojo supercomputer.
In the meantime, Dojo and its impressive AI talent alone make Tesla stock worth watching on the way down as other investors begin to view the firm as more of an auto play than an AI company.
Apple (AAPL)
Apple (NASDAQ:AAPL) stock was under some serious pressure on Monday, shedding around 3% of its value at the worst part of the trading day before closing off by 2.5%. Year to date, AAPL stock is down around 6%, while the Nasdaq 100 is up more than 10%.
Undoubtedly, Apple got slapped with a stiff fine — close to $2 billion — from the European Union (EU) due to its music-streaming dominance. These anti-trust penalties come amid increased fear that Apple may be behind in the generative AI race.
My take?
Don’t discount the words of Apple’s legendary CEO, Tim Cook. Investors shouldn’t discount its potential if he’s hinting at generative AI tech on the horizon. Additionally, Apple quietly launched new Macbook Airs with the latest and greatest Apple Silicon: the M3 chip. The company calls it “the world’s best consumer laptop for AI.”
Overlook the Macbook Air launch, but I think it’s the start of many AI-driven things for the year.
At around $175 per share, Apple stock goes for around 27.5 times forward price-to-earnings (P/E), a pretty reasonable multiple to pay for one of the planet’s most cherished consumer products companies (and underrated AI innovators).
Even if Apple’s playing from behind, it’s still very much in the game.
Atlassian (TEAM)
Atlassian (NASDAQ:TEAM) is a software company with a less-than-ideal start to 2024, with shares down around 9% year to date. The company, which makes software products for developers, is innovating on the AI front to stay ahead in its corner of productivity software.
Given the productivity-enhancing powers of generative AI, AI has become a must for Atlassian. Though AI could pave the way for rival firms, I’d argue Atlassian’s wide economic moat may not be so quick to narrow.
From incorporating AI-generated summaries to offering a wide range of AI apps on its own marketplace, Atlassian has a world of upselling opportunities as it looks to showcase what AI has to offer at the workplace. The company aims to “accelerate work” with its suite of AI tools. And thus far, I’d say the firm’s done a great job of staying at the forefront of the AI revolution.
On the date of publication, Joey Frenette owned shares of Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
