Software and tech stocks, especially those in the sizzling AI and social media fields, have been the stars of the show. However, these high-flyers are just a sliver of the oversold tech stocks trading on the market today.

There’s a treasure trove of oversold tech stocks still waiting to be discovered. These hidden gems could be primed for a major comeback as interest rate cuts kick in and the economy shifts into a new cycle. Sure, betting on recovery plays is always a bit of a gamble. That said, the potential upside often justifies the downside risk of these already-depressed stocks.

Here are seven oversold tech stocks to consider looking into:

Snapchat (SNAP)

Snapchat (NYSE:SNAP) doesn’t really need an introduction. However, if you’re new to the social media world, Snapchat is basically a visual messaging app. The stock has experienced significant volatility over the past year, trading in a depressed range despite being up 20% as of writing. I believe there is huge upside potential for SNAP going forward.

Snapchat reported revenue of $1.19 billion in Q1 2024, a 21% increase year-over-year. The company also saw its daily active users grow 10% to 422 million. Despite this growth, Snapchat’s average revenue per user (ARPU) has remained stagnant. I see significant room for improvement in this metric, which could drive the oversold tech stock higher. Earnings per share is also expected to recover massively in the coming quarters.

Another major potential tailwind for Snapchat is the possibility of TikTok getting banned in the U.S., Given the significant user overlap between the two apps. I believe Snapchat would be a prime beneficiary if TikTok refugees need a new platform. This could provide a substantial boost to Snapchat.

PayPal (PYPL)

PayPal (NASDAQ:PYPL) is a digital payment platform that enables online money transfers for consumers and merchants worldwide. The stock has remained depressed for an extended period, largely due to high interest rates suppressing transaction volumes and a slowdown in user growth following the COVID-19 boom. However, I believe there are compelling reasons for optimism about PayPal’s future prospects.

PayPal’s core financials remain robust. The company made $5 billion in buybacks last year and is doing it again this year. Revenue growth also came in at 9.4%, which is not that bad compared to its historical top-line growth. The financials suggest the stock should’ve recovered back to its pre-pandemic levels at least a year ago. That hasn’t been the case due to user account growth in the negatives and cash flow taking a hit from buybacks.

Notably, user account growth has turned positive again, well, sequentially. However, this could imply an inflection point.

ACM Research (ACMR)

ACM Research (NASDAQ:ACMR) develops and sells semiconductor process equipment for wet cleaning, electroplating and other processes. I’m bullish on this U.S. based company as it’s well-positioned to benefit from the AI and data boom, along with the billions in tax breaks and subsidies being poured into the semiconductor industry.

ACM Research has been one of the fastest-growing players in the space, reporting a 105% year-over-year revenue surge to $152.2 million in Q1 2024. The company’s gross margin remained strong at 52.5%, and it’s making strategic expansions in the U.S., Korea and Europe. Analysts have a “Strong Buy” consensus on the stock, with an average price target of $37.91, representing a 54.8% upside.

As long as the demand for advanced chips continues, driven by megatrends like generative AI, I believe ACM Research has the ingredients to keep compounding. The company is well-positioned to capture a piece of the over $70 billion in federal subsidies being sought by chipmakers. While there are risks, the overall semiconductor industry outlook for 2024 looks promising, with sales expected to rebound by 13% to $588 billion. I think ACM Research is a compelling play on these tailwinds.

Innovid (CTV)

Innovid (NYSE:CTV) is an independent software platform for creating, delivering, measuring and optimizing advertising across connected TV, linear TV and digital. I believe the company is well-positioned to benefit from the megatrends of increasing ad spending and a renewed focus on growth by Wall Street. Companies are bumping up their ad budgets again, and Innovid’s innovative solutions in the fast-growing connected TV space make it an attractive option for advertisers looking to maximize their return on investment.

Despite a recent decline, Innovid’s stock is still up an impressive 44% over the past year. The company exceeded revenue expectations in Q1 2024, reporting $36.7 million in revenue, a solid 21% year-over-year increase. This beat analyst estimates by a healthy 5.12%.

Looking ahead, analysts anticipate Innovid will turn a profit next year, with earnings expected to double the year after.

At the current price, the stock trades at around 16x earnings. While not a screaming bargain, I believe there’s potential for Innovid’s EPS to compound at an even higher rate, given the company’s strong position in the burgeoning connected TV advertising market.

Innovid’s Harmony initiative, launched in Q1 2024, aims to optimize the connected TV advertising ecosystem and could be a significant growth driver.

GigaCloud Technology (GCT)

GigaCloud Technology (NYSE:GCT) operates a B2B e-commerce marketplace connecting suppliers and resellers of large merchandise. You might initially assume it’s a cloud computing company based on the name, but that’s not the case. GigaCloud has been growing revenue at a blistering pace, nearly doubling year-over-year to $251 million in Q1 2024. Net income also surged 71% to $27 million. The company is riding megatrends like the rise of B2B marketplaces and e-commerce.

I believe GigaCloud has a long growth runway ahead. It’s attractively valued at just 10 times forward earnings despite the strong growth. The stock has already soared 270% over the past year but has consolidated recently. With interest rate cuts potentially on the horizon, I think GCT stock could be poised for another leg higher.

Wall Street is bullish on the company. In the latest quarter, GigaCloud handily beat analyst estimates with EPS of 66 cents and revenue of $251 million. The company also provided strong Q2 guidance of $265-280 million in revenue. Analysts see several tailwinds that could boost GigaCloud, like its expansion into branding services, growth of its third-party seller network, and synergies from its Noble House and Wondersign acquisitions.

While it’s still a relatively under-the-radar name, I believe GigaCloud one of the promising oversold tech stocks that deserves more attention. The company has delivered five straight quarters of revenue growth amid a tough environment for consumer spending. As it further optimizes its marketplace and pursues international expansion, I expect GigaCloud to keep putting up impressive numbers.

Udemy (UDMY)

Udemy (NASDAQ:UDMY) is an online learning platform that offers courses on a wide range of topics. With the job market becoming increasingly competitive due to the rise of AI, many people are scrambling to learn new skills to stay relevant. I believe Udemy is well-positioned to benefit from this trend, especially in developing countries where access to quality education can be limited.

The company reported strong Q1 2024 results, with total revenue growing 12% year-over-year to $197 million. Udemy Business, which serves enterprise customers, saw a particularly impressive growth of 24%. Annual recurring revenue also increased 21% to $479 million.

Despite the positive financials, Udemy’s stock has been on a downward trajectory, declining over 38% in the last six months. However, analysts expect earnings per share to jump from 8 cents to 54 cents over the next two years, which could drive the stock higher in the long run. Udemy also has a solid cash buffer.

BM Technologies (BMTX)

BM Technologies (NYSEMKT:BMTX) provides digital banking services through its cloud-based platform. I believe the rise of digital banking is an unstoppable megatrend, and BM Technologies is well-positioned to ride this wave. The company’s first quarter 2024 results showed significant improvement, with revenue of $16.2 million and net income turning positive to $700 thousand. This suggests the turnaround efforts are starting to pay off.

BM Technologies’ stock has been beaten down but looks to have bottomed out recently. Analysts have a “Strong Buy” consensus on the stock, with an average price target of $6.75. That implies a significant upside from the current price of around $2.9. I think once interest rates start getting cut, digital banking platforms like BM Technologies could see a major breakout among oversold tech stocks.

On the date of publication, Omor Ibne Ehsan did not hold (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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.