Tech also makes up a large concentration of the S&P 500 and the Nasdaq. If tech stocks fall, the entire market will feel the impact. Luckily, most tech stocks have been gaining value in the long run, including the stocks covered in this article.
It’s still possible to find undervalued tech stocks, especially if you approach each asset with a long-term perspective. Anything can happen in a year, as macroeconomic factors, earnings reports and other short-term events can impact stock prices. However, these corporations look like they can deliver solid gains and dividends over the next decade. Investors may want to take a closer look at these undervalued tech stocks.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is striving to become one of the world’s leading AI giants. The company has plenty of capital to invest thanks to its healthy cash reserves and strong financials. The advertising giant reported 27% year-over-year (YOY) revenue growth in the first quarter, and net income more than doubled.
Meta Platforms’ “Year of Efficiency” has done wonders for the stock price. Shares are up by 51% year-to-date and have surged by 159% over the past five years. The company’s 3.24 billion daily active users and millions of advertisers suggest that revenue will continue to pour into the company’s coffers.
The stock trades at a 30.7 P/E ratio, which seems reasonable given the company’s incredible net income growth. Meta Platforms also offers a 0.38% yield and should maintain a double-digit dividend growth rate for several years. Wall Street analysts are bullish on the stock and have given it a Strong Buy consensus rating.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is another Wall Street favorite currently rated as a Moderate Buy. The highest price target of $270 per share implies the stock can gain an additional 30% from current levels.
The chipmaker is riding AI tailwinds and has logged a 46% year-to-date gain for investors. Shares are also up by 176% over the past five years. Qualcomm also offers a 1.64% yield and trades at a 28 P/E ratio. The tech giant has maintained a high single-digit dividend growth rate for several years, including this year’s 6.3% dividend hike.
Qualcomm delivered 1% YOY revenue growth in Q2 FY24, which indicates the company’s headwinds are in the rearview mirror. Net income jumped by 37% YOY in the same quarter. The rising demand for artificial intelligence could result in revenue acceleration in the upcoming quarters. Qualcomm is a relatively undervalued AI chip stock that presents more upside for long-term investors.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) generates most of its revenue from online advertisements. Google and YouTube are two of the most popular websites, and they attract a steady amount of visitors and advertisers. However, the company is diversifying its revenue, with Google Cloud now accounting for more than 10% of the company’s revenue.
Overall revenue increased by 15% YOY in the first quarter, while net income was up by 57% YOY. The tech giant has been cutting costs and will likely deliver higher profit margins in the upcoming quarters.
Alphabet stock has delivered solid returns for long-term investors. Shares are up 36% year-to-date and have rallied 232% over the past five years. The stock trades at a 30 P/E ratio and offers a 0.42% yield. Wall Street analysts believe the stock can rally higher and gave it a consensus Strong Buy rating. The highest price target of $225 per share implies the stock can gain an additional 18%.
On this date of publication, Marc Guberti held a long position in GOOG. 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 held a long position in GOOG.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.