In this article, we will look at the 10 Best Tech Stocks to Invest In On the Dip.
How’s The Tech Sector Performing in Q3 2024?
Dan Romanoff, a senior equity research analyst at Morningstar provided insights into the current state of the technology sector, on October 1st, 2024. His analysis highlights significant challenges and opportunities for the industry. Romanoff mentioned that after a robust start to 2024, the tech sector experienced a slump in the third quarter. Despite this downturn, software and services companies have continued to report solid quarterly results, even as their stock prices have remained relatively flat. Semiconductor firms, while showing potential for recovery, are currently dragging down overall sector performance.
While discussing the sector-wise ranking of the US stock market based on the Q3 earning season, Romanoff pointed out that the technology sector has been the second-best-performing sector over the past year but ranks as the second-worst performer in the most recent quarter. Romanoff emphasizes that despite these fluctuations, there are positive long-term trends that could benefit the industry. He expressed confidence in several long-term growth drivers within technology, including cloud computing, artificial intelligence, and the expansion of semiconductor demand. He mentioned that these factors are expected to sustain growth in the sector even amidst short-term challenges.
Moreover, according to Romanoff, the Morningstar US Technology Index has risen by 32% over the past twelve months, outperforming the broader US equity market’s 24% gain. He notes that while the median US technology stock is fairly valued with a modest margin of safety, the sector trades at a slight premium on a market-weighted basis. He identifies semiconductors and hardware as being overvalued compared to software, which appears more attractive at present.
Read More: 10 Best Small-Cap Stocks Ready To Explode and 10 Cheap NASDAQ Stocks To Invest In Now.
Romanoff also pointed out that generative AI is a significant force within technology. Companies are increasingly integrating next-generation AI capabilities into their products and services. This trend is particularly evident among cloud providers and semiconductor manufacturers. Despite some recent stock pullbacks for Nvidia, Romanoff believes there are still substantial investment opportunities in generative AI beyond just major players. He mentioned that he sees 34% growth in Gen AI Networking equipment spending through 2028. Romanoff also pointed out that the usage of chips and networking gear has grown together from 2022 to 2024 and he expects the trend to continue till 2028.
With that lets take a look at the 10 best tech stocks to invest in on the dip.
A technician at a sophisticated computer hardware rig, emphasizing the company’s chip-manufacturing capabilities.
Our Methodology
To curate the list of the 10 best tech stocks to invest in on the dip, we used the Finviz stock screener and CNN. Using the screener we shortlisted technology stocks that were down at least 25% on a year-t0-date basis, but analysts see a more than 25% upside. Once we had an aggregated list of the tech stocks fitting our criteria, next we cross-checked their analyst upside potential from CNN. Lastly, we ranked these stocks in the ascending order of the analyst upside potential. Please note that the data was collected on November 25, 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Tech Stocks to Invest In On the Dip
10. Wolfspeed, Inc. (NYSE:WOLF)
Share Price: $9.74
Year-To-Date Performance: -77.47%
Analyst Upside Potential: 28.21%
Wolfspeed, Inc. (NYSE:WOLF) is a leading company in the semiconductor industry, specializing in wide bandgap semiconductors. These materials, particularly silicon carbide (SiC) and gallium nitride (GaN), are essential for various power applications due to their efficiency and performance advantages over traditional silicon-based components. It is one of the best tech stocks to invest in on the dip.
Wolfspeed, Inc. (NYSE:WOLF) opened the world’s largest 200mm silicon carbide plant in upstate New York in 2022 as management believes silicon carbide chips will disrupt the traditional silicon chips. The stock was doing well in a low interest rate environment and with the EV market running hot. However, as the interest rates rose and the EV market cooled down its stock took a hit and has been down by around 77% on a year-to-date basis.
During the first quarter of fiscal 2025 as well, the company reported significant steps towards its business expansion. The company targets generating approximately $3 billion in annual revenue from its new 200mm silicon carbide manufacturing footprint at facilities in Mohawk Valley, New York, and North Carolina.
It also signed a preliminary memorandum for up to $750 million in direct funding under the CHIPS and Science Act, along with an additional $750 million from a consortium of lenders. This brings the total potential funding to $2.5 billion, which will facilitate their expansion plans in the US.
In the first quarter, Wolfspeed reported a remarkable 2.5 times year-over-year growth in its automotive sector. The number of car models utilizing Wolfspeed’s silicon carbide solutions has quadrupled from 2023 to 2024, with expectations of a further 75% increase in 2025.
ClearBridge Growth Strategy stated the following regarding Wolfspeed, Inc. (NYSE:WOLF) in its Q3 2024 investor letter:
“We exited long-time holding Wolfspeed, Inc. (NYSE:WOLF), a leading global supplier of silicon carbide substrate wafers and devices. After giving management ample time to ramp production at its new Mohawk Valley facility, we closed the position due to continued execution missteps and cyclical headwinds impacting electric vehicle, industrial and energy applications that have repeatedly pushed the company’s path to profitability further out.”
9. indie Semiconductor, Inc. (NASDAQ:INDI)
Share Price: $5.38
Year-To-Date Performance: -29.09%
Analyst Upside Potential: 48.70%
indie Semiconductor, Inc. (NASDAQ:INDI) specializes in creating automotive semiconductors and software solutions that enhance vehicle technology. It focuses on key high-growth areas including Advanced Driver Assistance Systems (ADAS), driver automation, in-cabin user experience, and electrification.
During the third quarter results for fiscal 2024, indie Semiconductor, Inc. (NASDAQ:INDI) announced securing design wins with major automotive manufacturers such as Porsche, General Motors, and several Chinese OEMs like BYD and Xiaomi. Management noted that China’s demand for integrated circuits (ICs) remains strong, particularly in the electric vehicle sector, indicating a healthy market presence.
The company also expanded its strategic backlog to $7.1 billion, up from $6.3 billion last year, driven primarily by momentum in Advanced Driver Assistance Systems (ADAS). ADAS programs now account for over 72% of this backlog, highlighting the company’s strong position in this critical market segment. Overall, the revenue for the quarter came in at $54 million up 3.1% subsequentially and surpassing management’s guideline.
As more and more automotive companies are testing and launching assisted driving technologies and autonomous vehicles, the demand for indie Semiconductor, Inc. (NASDAQ:INDI) technologies remains robust. Although, the stock has been down 29% on a year-to-date basis, analysts’ 12-month median price target points towards 49% upside from current levels. Management is also optimistic about the company’s future and is expecting fourth-quarter revenue to increase by more than 7% sequentially, projecting a midpoint revenue of $58 million. It is one of the best tech stocks to invest in on the dip.
Baron Opportunity Fund stated the following regarding Indie Semiconductor, Inc. (NASDAQ:INDI) in its Q3 2024 investor letter:
“Indie Semiconductor, Inc. (NASDAQ:INDI) is a fabless designer, developer, and marketer of automotive semiconductors for advanced driver assistance systems (ADAS) and connected car, user experience, and electrification applications. Indie’s stock fell during the quarter as it guided 2024 revenue growth below Street expectations, as auto production is expected to be incrementally worse, and excess inventory in the automotive supply chains of its customers has delayed indie’s new chips from ramping into high-volume programs. Despite these near-term headwinds, indie is outperforming peers who are seeing significant year-over-year sales declines. It has not suffered a program cancellation for any intact car programs, and it continues to win new sockets in future car platforms, positioning the company for strong growth over the medium and long term, supported by its $6.3 billion design win backlog, of which $4.6 billion is in ADAS applications. Indie has several large-volume programs set to ramp beginning in early 2025, including a marquee radar-related win, the biggest program in the company’s history, which we believe will drive a return to outsized growth in 2025 (indie doubled revenue each year from 2021 through 2023). We believe indie can continue to significantly outpace the broader industry and will approach $1 billion in revenue by the end of this decade, all supported by its contracted visibility, and its stock will re-rate as rapid growth returns.”
8. StoneCo Ltd. (NASDAQ:STNE)
Share Price: $10.76
Year-To-Date Performance: -39.11%
Analyst Upside Potential: 49.34%
StoneCo Ltd. (NASDAQ:STNE) is a financial technology company that provides various software solutions to help businesses manage their transactions and operations more effectively. The company specializes in technology solutions that facilitate electronic payments and financial services for businesses, particularly small and medium-sized enterprises.
Although the stocks have been down around 39% on a year-to-date basis, particularly due to the hit it took by the headwinds during the pandemic and the mishap of unreliable government data usage while assessing the creditworthiness of clients. However, during fiscal 2024, StoneCo Ltd. (NASDAQ:STNE) demonstrated significant progress toward its strategic goals, achieving several key financial metrics and maintaining a strong market position.
The financial services segment of the company showed strong profitability, with the take rate for Micro, Small, and Medium Businesses (MSMBs) reaching a record 2.58%. This increase was driven by a growing credit portfolio and stable banking revenues amid a competitive payments environment. Moreover, the company also reported robust growth in transaction volumes, particularly in PIX QR Code transactions. The total payment volume (TPV) for MSMB cards grew by 16% year-to-date, while overall MSMB TPV increased by 23% during the same time.
Ave Maria World Equity Fund stated the following regarding StoneCo Ltd. (NASDAQ:STNE) in its fourth quarter 2023 investor letter:
“StoneCo Ltd. (NASDAQ:STNE) provides solutions that enable merchants and integrated partners to conduct electronic commerce seamlessly across in-store, online, and mobile channels in Brazil. StoneCo has faced near-term operational challenges because of the pandemic and high levels of inflation in Brazil. The company appears to be moving past these challenges and it appears that the successful integration of the newly acquired software business with its payments business will drive substantial shareholder value longer term.”
7. Axcelis Technologies, Inc. (NASDAQ:ACLS)
Share Price: $77.40
Year-To-Date Performance: -37.94%
Analyst Upside Potential: 51.75%
Axcelis Technologies, Inc. (NASDAQ:ACLS) is another technology company that specializes in designing, manufacturing, and servicing equipment used in the production of semiconductor chips.
One of the key products made by the company includes machines called ion implanters, which are essential for adding specific materials (dopants) into semiconductor wafers. The Ion implanters can be tailored for various needs including high energy, high current, and medium current depending on the requirement. In addition, it also provides maintenance services, spare parts, equipment upgrades, and consumer training services.
Purion series is one of their flagship products, which is designed to enhance chip manufacturing efficiency. During the third quarter of fiscal 2024, Axcelis Technologies, Inc. (NASDAQ:ACLS) reported revenue of $256.6 million, slightly up from the previous quarter’s $256.5 million. The revenue came from two main segments including, $201.1 million from systems sales and $55.5 million from consumables, spares, and services (CS&I). Management expects the CS&I segment to grow steadily as the company’s installed base increases, providing ongoing revenue and profitability.
China remains one of the significant markets for Axcelis Technologies, Inc. (NASDAQ:ACLS) and accounted for around 71% of total system sales, driven by demand in the image sensor market for smartphones. However, management anticipates a decline in revenue from China in the fourth quarter and early 2025 due to customers adjusting to previously built capacity.
Middle Coast Investing stated the following regarding Axcelis Technologies, Inc. (NASDAQ:ACLS) in its Q3 2024 investor letter:
“Axcelis Technologies, Inc. (NASDAQ:ACLS), the semiconductor equipment maker we own in most accounts, is also in transition. Demand for electric vehicles and hybrids has slowed, while demand for memory chips has not yet picked up. Caught in between these cycles, its shares sold off heavily this quarter, and as one of our biggest positions, that hurt our results. It is also a company with a great balance sheet, that has gained share in its sector, and that is exposed to areas of our economy that should grow for years, all while priced relatively cheaply. Micron’s earnings at the end of the quarter suggested the memory recovery is at hand.”
6. Concentrix Corporation (NASDAQ:CNXC)
Share Price: $44.14
Year-To-Date Performance: -54.81%
Analyst Upside Potential: 58.66%
Concentrix Corporation (NASDAQ:CNXC) is a technology company that specializes in improving customer experiences for businesses. The company also uses data to understand customer behavior and feedback. For instance, the Voice of Customer service of the company involves gathering and analyzing customer feedback to understand their needs better.
The company, on September 25th, announced the launch of its new product called iX Hello, which is an intelligent experience technology suite designed to enhance business productivity through generative AI. The product is a fully customizable, AI-powered virtual assistant that can be tailored to fit the specific needs of any business. It can be deployed quickly without requiring complex coding, making it accessible to various teams within an organization.
Concentrix Corporation (NASDAQ:CNXC) has been doing great in terms of revenue generation. For the third quarter of fiscal 2024, the company generated $2.39 billion in revenue, up 46.2% year-over-year. As per the management, revenue growth for the quarter was driven by 8% year-over-year growth in retail, travel, and e-commerce verticals.
It is one of the best tech stocks to invest in on the dip and analysts’ 12-month median price target is pointing towards a 59% upside from current levels.
FPA Queens Road Small Cap Value Fund stated the following regarding Concentrix Corporation (NASDAQ:CNXC) in its Q3 2024 investor letter:
“Concentrix Corporation (NASDAQ:CNXC) is one of two top customer experience (CX) vendors globally. The company began by managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and runs customer-facing websites and apps, integrates the data, and optimizes a client’s customer interactions. The company was spun out from TD Synnex, another of the Fund’s core holdings, and we have always been impressed with CNXC’s innovation and growth. CX is a relatively new business model, and Concentrix has been rolling up smaller competitors. In March, 2023 they bought WebHelp, a leading European CX player, for $4.8B in cash and stock. 22 We believe the WebHelp acquisition will help consolidate an industry where Concentrix and Teleperformance are the largest players.
The market is currently concerned about the potential of artificial intelligence to disrupt Concentrix’ core call center business – all CX companies’ shares are down badly over the last two years.23 On Sep. 25, 2024 CNXC stock got hit again when they released fiscal 2024 Q3 results and took down revenue guidance – fiscal 2024 organic revenue is now expected to come in between -.5% and 1.5%. 24 Concentrix has a debt to EBITDA ratio of 3x from the Webhelp deal which will be a problem if earnings deteriorate quickly. But Concentrix now trades at less than five times adjusted EPS and is highly cash generative. We think, but don’t know, that Concentrix’ domain knowledge and integration into customers’ work flows make for meaningful switching costs and that clients will be reluctant to let AI manage the relationships with their customers. We have held on to Concentrix shares but have not added to the position.”
5. PagSeguro Digital Ltd. (NYSE:PAGS)
Share Price: $8.12
Year-To-Date Performance: -32.96%
Analyst Upside Potential: 59.65%
PagSeguro Digital Ltd. (NYSE:PAGS) is a Brazilian Fintech company that provides a variety of services aimed at helping individuals and small businesses manage their finances and accept payments. The company not only offers a free digital bank account called PagBank, which allows users to perform typical banking activities without needing a traditional bank account. It also provides tools for accepting payments both online and in-person including Point of Sale (POS) and Mobile Point of Sale (mPOS) devices.
PagSeguro Digital Ltd. (NYSE:PAGS) reported significant growth across various financial metrics during its third-quarter results for fiscal 2024. For instance, its Total Payment Volume (TPV) increased by 37% year-over-year, reaching $23.46 million in Q3 2024. The growth was driven by all market segments, including micro, small, and medium businesses (MSMB), which saw a 26% increase year-over-year in TPV.
Moreover, the company also grew its total clients and active business clients by 6.2% and 3.4% year-over-year. As a result of an increase in active clients, the Cash-in for the company increased by 49% year-over-year, whereas the credit portfolio surpassed $553 million after increasing 30% during the same time. PagSeguro Digital Ltd. (NYSE:PAGS) remains on track to deliver expected results for fiscal 2024.
4. Viasat, Inc. (NASDAQ:VSAT)
Share Price: $9.62
Year-To-Date Performance: -65.69%
Analyst Upside Potential: 65.80%
Viasat, Inc. (NASDAQ:VSAT) is a global communications company that specializes in providing high-speed satellite broadband and secure networking solutions. The company offers high-speed internet services primarily through satellite technology, catering to both residential and commercial customers. This includes fixed broadband for homes and mobile broadband for businesses and government operations. It also develops a variety of satellite and wireless products, along with network and terminal solutions that facilitate broadband connectivity.
The company serves a diverse range of industries including, aviation, maritime, energy, and government sectors. In the second quarter of fiscal year 2025, Viasat reported a revenue of $1.1 billion, which represents an 8% decrease compared to the same period last year. However, when excluding a one-time revenue boost from a litigation settlement in the previous year, the revenue decline is only 1%. This slight decrease was due to lower earnings from their Communication Services segment, which was offset by growth in their Defense and Advanced Technologies (DAT) sector.
Viasat, Inc. (NASDAQ:VSAT) achieved record contract awards totaling $1.3 billion, marking a 25% increase from the previous year. The DAT segment alone saw its awards more than double, reaching about $510 million during this quarter. Although the stock of the company has been down 66% year-to-date, analysts’ 12-month median price target is pointing towards a 66% upside from current levels. It is one of the best tech stocks to invest in on the dip.
Cove Street Capital Small Cap Value Fund stated the following regarding Viasat, Inc. (NASDAQ:VSAT) in its Q3 2024 investor letter:
“Viasat, Inc. (NASDAQ:VSAT), E.W. Scripps (ticker: SSP), and Compass Minerals (ticker: CMP) were our biggest detractors this year. Each has specific fundamental problems, but they share perceptions of balance sheet issues that we would suggest are producing grossly negative viewpoints on their respective stock prices. Viasat just refinanced most of its debt stack which puts that to rest; Scripps has stated they will sell its Bounce TV network by the November earnings call; and Compass booted its CEO, and we believe we are days or quarters from a “for sale” sign. Not our finest moments, but all are stupid cheap in our opinion with real asset support. Recent Fed decisions should help here.”
3. WEBTOON Entertainment Inc. (NASDAQ:WBTN)
Share Price: $12.03
Year-To-Date Performance: -47.70%
Analyst Upside Potential: 91.38%
WEBTOON Entertainment Inc. (NASDAQ:WBTN) operates a leading global storytelling platform that connects creators and users through a diverse range of digital content, primarily in the form of web comics and web novels. The platform was launched by Naver Corporation and has grown to host millions of creators and engage a vast audience worldwide.
The company operates in over 150 countries, with a significant portion of its monthly active users coming from outside its primary markets, which include South Korea, Japan, and North America. The platform has more than 24 million creators and is used by around 170 million monthly active users.
On November 15, WEBTOON Entertainment Inc. (NASDAQ:WBTN) announced the launching a new Online Retail WEBTOON Shop for Webcomic merchandise. This will not only help the company increase engagement for its digital platform but will also add a new revenue stream from the direct-to-consumer merchandise market.
In its recent financial report for the third quarter of fiscal 2024, WEBTOON Entertainment Inc. (NASDAQ:WBTN) highlighted several key achievements that reflect its growth and profitability. It reported total revenue of $347.9 million, marking a 9.5% increase compared to the same period last year. This growth was primarily driven by strong performance in Paid Content and Advertising. Moreover, the company also achieved a net income of $20 million, a significant turnaround from previous losses. This improvement was attributed to better gross profit margins, increased interest income from cash assets, and favorable tax benefits.
2. Aehr Test Systems, Inc (NASDAQ:AEHR)
Share Price: $12.80
Year-To-Date Performance: -48.70%
Analyst Upside Potential: 96.54%
Aehr Test Systems, Inc (NASDAQ:AEHR) specializes in providing testing solutions for semiconductor devices. Their main products include the FOX-P family of systems, which are designed to test semiconductor devices at different stages including Wafer Level Testing and Singulated Die Testing. The systems also perform “burn-in” tests, where devices are subjected to stress conditions to identify any early failures. This process helps ensure that the final products are reliable and function properly once in use.
While the revenue of Aehr Test Systems, Inc (NASDAQ:AEHR) was down 36.5% year-over-year to $13.1 million. It was actually above analyst expectations. The slow down in electric vehicle sales has impacted stock negatively and it has dropped 48.70% on a year-to-date basis.
However, what’s impressive about the company is the fact that the company has received its first orders to test AI accelerators. This means that the company has potentially entered a new hyper growth market. CEO, Gayn Erickson mentioned that they are currently in discussions with its first customer for gallium nitride (GaN) semiconductor devices, focusing on volume production testing and burn-in processes.
The company anticipates that the market for GaN devices will expand rapidly, with a projected compound annual growth rate (CAGR) exceeding 40%, potentially reaching over $2 billion in annual sales by 2029. Analysts are also betting high on the stock as their 12 month median price target points towards a 96.54% upside from current levels.
1. Pagaya Technologies Ltd. (NASDAQ:PGY)
Share Price: $10.58
Year-To-Date Performance: -32.18%
Analyst Upside Potential: 118.22%
Pagaya Technologies Ltd. (NASDAQ:PGY) is a financial technology (FinTech) company based in Israel. In simple terms, the company uses advanced technology, including data science, machine learning, and artificial intelligence (AI), to help lending companies assess the creditworthiness of potential customers quickly and accurately. The AI technology allows lenders to evaluate customers’ credit in real-time, which helps them make informed decisions about who to approve for loans.
It provides solutions for various types of loans, such as personal loans, car loans, and credit card loans. They primarily serve lending institutions around the world, enabling them to expand their customer base while minimizing risk.
The company has been focused on expanding its network base and partnerships. During the third quarter results of fiscal 2024, the company reported a network volume of $2.4 billion, reflecting an 11% year-over-year increase. This growth was supported by existing partnerships, particularly in personal loans, which grew 15% and point-of-sale loans which improved 67% compared to the previous year. It achieved a record total revenue of $257 million, marking a 21% increase year-over-year, primarily due to a 24% rise in fee revenue.
Net losses remain one of the concerns for management of Pagaya Technologies Ltd. (NASDAQ:PGY), which is mainly due to non-cash expenses and one time costs. The net losses have caused the stock price to go down by 32.18% on a year-to-date basis. However, CEO Gal Krubiner stated that the company is on track to achieve GAAP profitability and positive cash flow by 2025, driven by effective execution of their 2024 strategy, which entails adding new partnerships and network volume.
Looking ahead, management projects full-year 2024 network volume between $9.5 billion and $9.7 billion, with total revenue expected between $1.01 billion and $1.025 billion. It is one of the best tech stocks to invest in on the dip.
While we acknowledge the potential of Pagaya Technologies Ltd. (NASDAQ:PGY) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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