In this article, we will be taking a look at the 10 Best Cheap Technology Stocks to Invest In. To skip our analysis of the recent technology trends, and market activity, you can go directly to see the 5 Best Cheap Technology Stocks to Invest In.
Technology has been at the forefront of advancement and innovation in the recent past and is expected to be the primary catalyst in the future as well. The advancements in technology have not only improved the quality of life for individuals but have also resulted in improved productivity and efficiency across almost all aspects of life.
According to McKinsey & Company, the latest trends in the technology revolve around 14 major technologies, with clean energy, mobility, and connectivity leading the trends in terms of the investments made during 2021. Clean energy technologies focused on the whole energy value chain, from power generation to storage and distribution, were at the forefront with $257 billion investment last year. Other major trends include applied AI, Cloud, and edge computing, Web3, and immersive reality technologies, among others.
Despite the growing investments and the increasing importance of technology in our lives, the technology sector and the stocks of the companies that are part of this sector have not fared well in the recent past. The Nasdaq-100 index, heavily weighted with technology stocks, was down year-to-date by nearly 31%, as of September 26, 2022.
Global markets have been going through a rough patch with fears of an economic slowdown due to inflation and aggressive monetary policies implemented by central banks. On September 21, the US central bank raised interest rates by three-quarters of a percentage point for the third consecutive time and signaled further increases in the future.
The increase in interest rates has led to a significant drop in share prices across the US market. If economic data fails to meet expectations, there’s potential for further declines in stocks. Given the uncertainty, diversification across different companies and sectors can be a good idea. Given the lower valuations, there could be an opportunity for long term investors to buy quality blue chip stocks.
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Methodology
For the list of 10 Best Cheap Technology Stocks to Invest In, we found cheap stocks by finding stocks that were trading significantly below the average analyst price target.
We then filtered those stocks by only including tech companies and using the collective wisdom of hedge funds, we ranked them by the number of hedge fund holders in our database who held shares in the same stock at the end of Q2 2022.
10 Best Cheap Technology Stocks to Invest In
10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation (NYSE:IBM), based in Armonk, New York, is a technology company engaged in providing hybrid cloud and artificial intelligence (AI) solutions. It offers Software, Consulting, Infrastructure and Financing solutions.
As of September 26, International Business Machines Corporation (NYSE:IBM) shares have lost 8.2% of their value since the beginning of the year and currently trade at a forward P/E ratio of 12.21. Despite the recent bearish trend, analysts have an average price target of $143.03 for International Business Machines Corporation (NYSE:IBM) shares, which represents a potential upside of 17% based on the current share price.
On August 16, Credit Suisse analyst Shannon Cross assumed coverage of International Business Machines Corporation (NYSE:IBM) with an ‘Outperform’ rating and a price target of $163, up from $156 for its shares. The analyst believes that the company is “is well positioned to likely benefit from what the company estimates is a $1T market opportunity in hybrid cloud.”
As of Q2 2022, 40 of the 895 hedge funds tracked by Insider Monkey owned shares of International Business Machines Corporation (NYSE:IBM), valued at $948 million. Its largest shareholder was Ken Griffin’s Citadel Investment Group.
Alongside Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), International Business Machines Corporation (NYSE:IBM) is a cheap technology stock that’s held by many hedge funds at the end of Q2 2022.
9. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 55
Dallas, Texas-based Texas Instruments Incorporated (NASDAQ:TXN) is a global semiconductor company that designs, manufactures, tests, and sells analog and embedded processing chips. Its more than 80,000 products are used by customers across industrial, automotive, personal electronics, communications equipment, and enterprise systems.
As of September 26, Texas Instruments Incorporated (NASDAQ:TXN) shares have lost 14.4% of their value since the beginning of the year and currently trade at a forward P/E ratio of 18.09. The analyst estimate for Texas Instruments Incorporated (NASDAQ:TXN) isn’t so gloomy, however, as analysts hold an average price target of $186.61 for its shares which represents a potential upside of 16% based on the current share price.
As of Q2 2022, 55 of the 895 hedge funds tracked by Insider Monkey held shares of Texas Instruments Incorporated (NASDAQ:TXN), worth $1.6 billion. First Eagle Investment Management was its largest shareholder with ownership of 3.5 million shares valued at $542 million.
8. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Santa Clara, California-based Intel Corporation (NASDAQ:INTC) is a leading technology company best known for developing the microprocessors found in most of the personal computers used worldwide. It offers products for autonomous driving, 5G network, client connectivity, cloud computing, IoT, client computing, and AI and Analytics.
Intel Corporation (NASDAQ:INTC) shares have taken a significant beating so far this year with shares down by 46.56% year-to-date and trading at a forward P/E ratio of 10.44, as of September 26. A majority of the analysts are bullish on the prospects of the chipmaker with average price target of $37.80 for its shares, representing a 40% potential upside in the share value.
On September 7, Stifel analyst Ruben Roy initiated coverage of Intel Corporation (NASDAQ:INTC) with a ‘Hold’ rating and $32 price target. The analyst believes that “the company’s turn-around strategy is still in its “early innings” and significant capital needs will result in a negative impact to free cash flow through 2024”.
As of Q2 2022, 65 of the 895 hedge funds tracked by Insider Monkey owned shares of Intel Corporation (NASDAQ:INTC), valued at $2.5 billion. Its largest shareholder was Generation Investment Management with ownership of 14.8 million shares valued at $553 million.
7. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 71
San Diego, California-based QUALCOMM, Incorporated (NASDAQ:QCOM) is a leading wireless technology innovator and the driving force behind the development, launch and expansion of 5G technology. Its portfolio includes products for processors, modems, platforms, RF systems, and connectivity, among others.
QUALCOMM, Incorporated (NASDAQ:QCOM) is among some of the worst performing stocks in the US market with shares down by 33.73% since the beginning of the year, as of September 26. With the forward P/E ratio currently hovering around 9.36, analysts have an average price target of $186.01, which represents a 55% potential upside to the current price.
On September 27, JPMorgan analyst Samik Chatterjee reiterated his belief in QUALCOMM, Incorporated (NASDAQ:QCOM) shares as the analyst believes the stock’s current valuation “provides substantial upside, while downside remains limited despite smartphone headwinds”. The analyst maintains an ‘Overweight’ rating and a price target of $185.
As of Q2 2022, 71 of the 895 hedge funds tracked by Insider Monkey were long QUALCOMM, Incorporated (NASDAQ:QCOM), holding shares worth $2.8 billion. Its largest hedge fund shareholder is Ken Griffin’s Citadel Investment Group.
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
San Francisco, California-based Salesforce, Inc. (NYSE:CRM) is the world’s leading customer relationship management platform provider. Its cloud-based platform has applications for sales, service, marketing, and more, with more than 150,000 companies using the platform.
As of September 26, Salesforce, Inc. (NYSE:CRM) shares have lost 42.15% of their value since the beginning of the year and trade at a forward P/E ratio of 25.88. Analysts maintain bullish sentiments for the stock with average price target of $222.41, representing 52% upside potential.
On September 27, Jefferies analyst Brent Thill told investors in a research note that Salesforce, Inc. (NYSE:CRM) can deliver high-teens growth while delivering margin leverage, and the analyst finds the stock “valued attractively at trough levels”. The analyst maintains a target price of $250 and a ‘Buy’ rating.
According to the Insider Monkey data on 895 leading hedge funds, 116 hedge funds were long Salesforce, Inc. (NYSE:CRM) shares as of Q2 2022, with the total shares held by hedge funds valued at $7.9 billion. Ken Fisher’s Fisher Asset Management was the largest shareholder on record with ownership of 15.7 million shares valued at $2.6 billion.
Like Salesforce, Inc. (NYSE:CRM), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are all cheap technology stocks held by many hedge funds in our database as of Q2 2022.
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Disclosure: None. 10 Best Cheap Technology Stocks to Invest In is originally published on Insider Monkey.
