10 Best Affordable Tech Stocks to Buy According to Analysts

5) Kyndryl Holdings, Inc. (NYSE:KD)

Forward P/E as of 23 August: 11.03x

Upside Potential: 31.58%

Expected EPS Growth This Year: Over 100%

Kyndryl Holdings, Inc. (NYSE:KD) is a technology services and infrastructure services provider. It offers advisory, implementation, and managed services throughout a range of technology domains to help customers manage and modernize enterprise IT environments.

Kyndryl Holdings, Inc. (NYSE:KD) has existing infrastructure services strengths which were established over the years when it was part of the IBM Global Technology Services (GTS) business unit. The company is pulling forward its timing of returning to revenue growth. It now aims to deliver positive revenue growth in 4Q 2025. This growth is expected to stem from its optimism about AI adoption.

Kyndryl Holdings, Inc. (NYSE:KD) tapped into the AI boom by offering consulting services and tech support for enterprise customers wanting to put AI tools to proper use. Therefore, the company’s services are supported by a significant amount of operating data and its machine learning tools.

Next, the company is letting go of low-margin contracts. These were inherited as a result of a spin-off from International Business Machines Corporation (NYSE:IBM). This should help widen the profit margins as the revenue gets into the sustained-growth mode.

Despite working in a capital-intensive industry, Kyndryl Holdings, Inc. (NYSE:KD) demonstrates characteristics of a resilient business. It enjoys predictable revenue from long-term contracts, customer loyalty, and the capability to pass on inflationary costs.

Analysts at Oppenheimer initiated coverage on the shares of Kyndryl Holdings, Inc. (NYSE:KD) on 27^th June. They gave an “Outperform” rating and a price target of $33.00. The number of hedge funds in Insider Monkey’s database owning stakes in Kyndryl Holdings, Inc. (NYSE:KD) increased to 36 in Q2 2024 as compared to 31 in the preceding quarter.

Tourlite Capital Management, an investment management firm, released its fourth quarter 2023 investor letter. Here is what the fund said:

“Kyndryl Holdings, Inc. (NYSE:KD): Despite making strong progress in its post spin-off initiatives and receiving multiple sellside upgrades, we believe Kyndryl remains undervalued. Current gross margins are significantly below normalized levels, and a significant portion of their new high-margin signings are still in backlog. Over the next two years, we anticipate high-margin signings to comprise over 60% of revenue, leading to incremental gross margins of approximately 4%. While operating in a capital-intensive industry, Kyndryl exhibits characteristics of a resilient business: predictable revenue from long-term contracts (>5 years), customer stickiness, and the ability to pass on inflationary costs. There remains ongoing work to address a sizable unprofitable account.”