In this article, we will look at the 12 Most Undervalued Tech Stocks to Invest in Now.
Will Tech And AI Be The Driving Force in 2025?
Katrina Dudley, global equity portfolio manager at Franklin Templeton Investments joined CNBC on December 31, 2024, to discuss which sectors are expected to continue with their gains in 2025. She mentioned that it is important to understand what sectors performed well last year to predict the future performance of the market. Dudley highlighted that technology was one of the sectors that worked well last year followed by some utility sector companies. The utility sector companies that performed well were mostly those power-producing companies that experienced increased demand due to AI. She emphasized that one of the themes she believes is secular and will continue to perform is the AI and the technology sector.
While talking about the high valuations of technology and communication services sector, Dudley acknowledged that these sectors are trading at lofty valuations above the S&P 500 index. However, she emphasized that valuations have never been a reason to sell something. It is important to unpack what high valuations are telling about the industry. She thinks that valuations at the moment reflect the number of things that the market is getting right. For instance, the earnings growth for these sectors has been positive, which is very different from the infinite bubble scenario. Moreover, the second contributing factor to higher valuations as explained by Dubley is the network effect, which is driving returns to the biggest players in the industry. Concerning these two points, she thinks there is a good rationale behind the tech stocks’ high valuation.
Dudley also highlighted that one of the ways the valuation multiple can come down is when these companies grow their earnings ahead of market consensus. This she believes is one of the risks that the market should be cognizant about. As earnings growth for any company is difficult to predict and when the market is expecting the company to deliver earnings growth there is always a risk of mis-execution. Therefore these high valuation companies need to deliver on earnings growth. Dudley mentioned that she is not worried about the valuations however it is something that she would be watching closely.
With that let’s take a look at the 12 most undervalued tech stocks to invest in now.
A macro view of a 5G/4G chips and modules, displaying the cutting edge technology of the company.
Our Methodology
To compile the list of the 12 most undervalued tech stocks to invest in now, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance. Firstly, we aggregated a list of tech stocks trading under the Forward P/E of 15 with positive earnings growth expected this year. Next, we cross-checked the Forward P/E ratio of each company from seeking alpha and expected earnings growth from Yahoo Finance. Lastly, we ranked the stocks based on the number of hedge fund holders of each stock, sourced from the Insider Monkey Q3 2024 hedge funds database. Please note that the data for this article was collected on January 17, 2025.
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).
12 Most Undervalued Tech Stocks to Invest in Now
12. Nokia Oyj (NYSE:NOK)
Forward P/E Ratio: 12.54
Earnings Growth: 23.90%
Number of Hedge Fund Holders: 16
Nokia Oyj (NYSE:NOK) is one of the most undervalued tech stocks to invest in now. It used to be a market leader in the computer and mobile hardware industry, however, today the company is known for its telecommunication and networking solutions. Services offered by the company range from network infrastructure, services for communication service providers (CSPs), software, and internet of things technology licensing. The company stands out with a robust portfolio of patents specifically related to 5G technology.
Nokia Oyj (NYSE:NOK) has observed positive trends in Fixed Networks and IP Networks, with growth rates of 9% and 6% respectively during the fiscal third quarter of 2024. Management attributed growth to a stabilization in operator deployment plans and the digestion of inventory issues that had previously hampered performance. The company is working to diversify its customer base by expanding into non-Communication Service Provider (CSP) markets, particularly focusing on opportunities in data centers and private wireless solutions. On January 15, Nokia Oyj (NYSE:NOK) announced a strategic partnership to implement the first 4G/5G Femtocell solution in the Middle East and Africa (MEA) region.
Moreover, on the same day management also announced signing a multi-year patent license agreement with Samsung, focusing on the use of Nokia’s video technologies in Samsung’s television products. As part of the agreement, Samsung will make royalty payments to Nokia Oyj (NYSE:NOK), although specific terms remain confidential between the parties. The financial outlook for fiscal 2024 remains unchanged, management expects comparable operating profit in the lower half of their target range with continued strong free cash flow conversion.
11. NICE Ltd. (NASDAQ:NICE)
Forward P/E Ratio: 14.86
Earnings Growth: 24.91%
Number of Hedge Fund Holders: 24
NICE Ltd. (NASDAQ:NICE) is an international software company that specializes in helping businesses improve their customer interactions and manage compliance against financial crimes. It differentiates through its CXone platform, a customer experiences (CX) tool that integrates artificial intelligence (AI) to improve customer interactions. The company has been focused on adapting its services to leverage AI and cloud technologies.
Broyhill Asset Management in their third quarter investor letter for 2024 highlighted that NICE Ltd.’s (NASDAQ:NICE) cloud-based software allows it to implement greater functionality, which its on-premises competitors fail to provide. Moreover, companies like NICE are leveraging AI into their offerings, thereby providing customers with wider access to new developments making them stand out in the market.
During the fiscal third quarter of 2024, the company proved Broyhill Asset Management’s sentiment to be true. It grew its revenue by 15% year-over-year to reach $690 million. The total revenue growth was greatly aided by a 24% increase in Cloud revenue which reached $500.1 million during the quarter. It is one of the most undervalued tech stocks to invest in now.
Broyhill Asset Management stated the following regarding NICE Ltd. (NASDAQ:NICE) in its Q3 2024 investor letter:
“NICE Ltd. (NASDAQ:NICE) develops software to run customer contact centers. The company’s cloud-based software enables the implementation of greater functionality versus its on-premise competitors. Many of these on-premise competitors, which do not offer cloud-based products, have stopped rolling out new features. This has prompted their customers to switch to companies like Nice where they have wider access to new developments. Artificial intelligence is a large part of this shift and of our differentiated view. The market views AI as a threat to Nice’s core operations; we view it as an enabler of additional revenue streams with improved economics.”
10. Gen Digital Inc. (NASDAQ:GEN)
Forward P/E Ratio: 12.4
Earnings Growth: 12.50%
Number of Hedge Fund Holders: 27
Gen Digital Inc. (NASDAQ:GEN) is an international provider of cyber and online security. It provides its services through a portfolio of well-known cyber security brands including Norton, Avast, LifeLock, Avira, AVG, and more.
Cybersecurity threats have been on the rise, a report by Security Intelligence published on August 19, 2024, highlighted that the US National Public Data Breach led to the exposing of around 270 million social security numbers, indicating that one out of three Americans are at risk of identity theft. This has further highlighted the use case for companies like Gen Digital Inc. (NASDAQ:GEN). During the second quarter earnings conference for fiscal 2025, management highlighted that as a result of increased cyber crimes, the company added 389,000 new customers to its client base to reach 39.7 million total customers.
To further improve the portfolio of its security offerings, management on December 10, 2024, announced its acquisition of MoneyLion, a consumer finance platform, for approximately $1 billion. The acquisition is aimed at enhancing the company’s offering in financial wellness alongside its existing cybersecurity and identity protection services. Gen Digital Inc. (NASDAQ:GEN) ranks 11th on our list of most undervalued tech stocks to invest in now.
9. Amdocs Limited (NASDAQ:DOX)
Forward P/E Ratio: 12.15
Earnings Growth: 4.97%
Number of Hedge Fund Holders: 28
Amdocs Limited (NASDAQ:DOX) is a software company that provides various tools that help businesses manage customer relationships, product life cycles, billing, and applications efficiently. Its major customers are communication and media sector businesses.
The company had a notable year in fiscal 2024. Despite facing challenges in industry demand it was still able to land significant contracts with major companies including AT&T, T-Mobile, and Vodafone Ziggo, among others, across North America, Europe, and Asia. Due to significant project wins throughout the fiscal year, Amdocs Limited (NASDAQ:DOX) reached record revenue of $5 billion, marking a 2.4% increase from the previous year. Its cloud services were a major contributor as it now accounts for 25% of its revenue.
Management is focusing on three main strategies which include cloud solutions, digital transformation for customer experience, and advancements in Generative AI technologies. To execute these strategies management on November 12, 2024, announced an enhanced amAIz platform. amAIz platform focuses on Generative AI capabilities aimed at improving customer engagement for communications service providers. The enhanced platform now includes specialized GenAI agents, such as GenAI Care and Sales Agents. These agents are designed to provide seamless customer support, handle billing inquiries, and facilitate sales interactions, thereby enhancing overall customer engagement. Moreover, its cheap valuation makes Amdocs Limited (NASDAQ:DOX) one of the most undervalued tech stocks to invest in now.
Palm Valley Capital Fund stated the following regarding Amdocs Limited (NASDAQ:DOX) in its Q3 2024 investor letter:
“The Fund’s top three contributors in Q3 were Lassonde Industries (ticker: LAS/A CN), Amdocs Limited (NASDAQ:DOX), and WH Group (ticker: WHGLY). Amdocs is one of the Fund’s larger positions. The stock appreciated during the quarter on record revenue and strong margins. The firm continues to facilitate digital and cloud migrations for the world’s leading telecommunications companies. Management has embraced the marketing opportunity from associating its services with AI (artificial intelligence), including tools used to streamline contact center call handling times. Recurring managed services revenue accounts for nearly 60% of the top line and includes agreements with many top providers such as AT&T, Vodafone, TELUS, and Charter. While the sell side sometimes seems to struggle with accepting Amdocs’ mature growth rates, we value the firm’s consistency and strong cash generation.”
8. Dropbox, Inc. (NASDAQ:DBX)
Forward P/E Ratio: 12.67
Earnings Growth: 24.98%
Number of Hedge Fund Holders: 29
Dropbox, Inc. (NASDAQ:DBX) is a cloud-based storage solutions company that allows individuals and teams to manage their work and files securely from anywhere. It is one of the most undervalued tech stocks to invest in now.
The year 2024 was a transitional year for the company. During the fiscal third quarter of 2024 management announced launching Dropbox Dash for Business, an AI-powered universal search tool designed to enhance how teams find, organize, share, and protect their content across various applications. Management is betting highly on Dropbox Dash to bring future growth and profitability as the company is facing a slowdown in its core business. Due to the slowdown in core business, Dropbox, Inc. (NASDAQ:DBX) reduced its employee headcount by 20%, translating to 528 jobs.
The company was able to post stable financial results for the fiscal third quarter of 2024 despite being in a strategic transition. It grew its total revenue by 0.9% year-over-year to reach $638.8 million. Revenue growth was driven by an addition of 19,000 users quarter-over-quarter, which led the annual recurring revenue to $2.579 billion.
7. Super Micro Computer, Inc. (NASDAQ:SMCI)
Forward P/E Ratio: 11.2
Earnings Growth: 119.32%
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) specializes in high-performance computing solutions providing servers and storage systems for data centers and AI. However, despite its extensive portfolio of servers including SuperBlade, BigTwin, and Ultra servers the company has faced significant challenges in recent months.
The company generates 64% of its revenue from selling OEM appliances and large data center solutions to major industry giants including NVIDIA, Amazon, Intel, and Microsoft. Super Micro Computer, Inc. (NASDAQ:SMCI) grew its top and bottom line by 33.68% and 75.82%, respectively based on increased application of its servers and direct liquid cooling (DLC) systems.
However, Its financial situation came under the radar after a report released by Hindenburg Research, which raised allegations of accounting issues. The issues led to delays in annual and quarterly filing raising concerns about its compliance with NASDAQ listing rules. According to the most recent developments announced by the company on December 6, 2024, Super Micro Computer, Inc. (NASDAQ:SMCI) has been allotted an extension by NASDAQ till February 25, 2025, to file its annual and quarterly report. Analysts are optimistic regarding its future growth prospects and stated management files the required documents within the allotted time. It is one of the most undervalued tech stocks to invest in now due to its cheap valuation.
Columbia Acorn Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q3 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) had a tough quarter due to a confluence of negative events. It declined, but is still up significantly for the year. While demand for the company’s AI server racks remains strong, with revenue up over 100%, gross margins have fallen sharply for two straight quarters, implying a price war. In addition, Super Micro was the subject of a short-seller report and a delay in filing its annual report with the SEC. We have been taking profits in the stock all year and have only a small position, which we are maintaining given the strong performance and demand for Super Micro’s AI racks and a depressed stock valuation.”
6. Seagate Technology Holdings plc (NASDAQ:STX)
Forward P/E Ratio: 13.04
Earnings Growth: 1465.13%
Number of Hedge Fund Holders: 46
Seagate Technology Holdings plc (NASDAQ:STX) is one of the most undervalued tech stocks to invest in now. It operates as a leading data storage solution provider. The company specializes in Hard Disk Drives and Solid State Drives, playing a critical role in enabling the AI revolution by helping cloud computing companies store data effectively.
While its HDDs and SDDs are already in high demand for cloud storage environments, Seagate Technology Holdings plc (NASDAQ:STX) has gained the spotlight due to its Heat Assisted Magnetic Recording (HAMR) drive, which is a nearline storage drive that increases the amount of data that can be stored on the drive by temporarily heating it. Management has shifted gears to increase production and sales of HAMR. It has already landed a major cloud customer for its new technology and plans to add more cloud clients during the current year.
As per a report published by Goldman Sachs cloud computing sales are anticipated to exceed $2 trillion by 2030. Considering the robust portfolio of Seagate Technology Holdings plc (NASDAQ:STX), demand for its storage drives is expected to grow substantially during this time. During the first quarter of fiscal 2025, the company highlighted robust demand for its nearline cloud drives which led its total revenue to grow 49% year-over-year.
5. Dell Technologies Inc. (NYSE:DELL)
Forward P/E Ratio: 14.08
Earnings Growth: 14.06%
Number of Hedge Fund Holders: 60
Dell Technologies Inc. (NYSE:DELL) ranked as the 5th most undervalued tech stock to invest in now. It specializes in technology infrastructure, and computing, and has gained an indispensable position with its AI servers.
Scout Investments, Inc., an affiliate of Carillon Tower Advisers in its second quarter investor letter for 2024 highlighted that Dell Technologies Inc. (NYSE:DELL) was one of the top contributors. The firm expects the company to become an important player in AI hardware infrastructure on the back of its depth and breadth of AI servers and personal computers product portfolio.
Management of Dell Technologies Inc. (NYSE:DELL) has the same plans as Scout Investment, Inc. pointed out. During the earnings call release for the fiscal third quarter of 2025, management highlighted that they believe the total addressable market for AI infrastructure to reach $265 billion by 2027, thereby providing a substantial growth runway for its AI servers. The company is already experiencing increased demand from the industry. During the third quarter, Its Infrastructure Solutions Group posted record revenue of $11.6 billion after growing 38% year-over-year. Here’s what Carillon Scout Mid Cap Fund stated regarding Dell Technologies Inc. (NYSE:DELL) in its Q2 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) was a top contributor despite reporting disappointing first-quarter earnings results because investors looked through the near-term disappointment and expected strong growth from AI-related servers and personal computers. We expect Dell to participate in the growth of artificial intelligence hardware, especially as enterprises invest more aggressively. We like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
4. Hewlett Packard Enterprise Company (NYSE:HPE)
Forward P/E Ratio: 10.99
Earnings Growth: 3.66%
Number of Hedge Fund Holders: 64
Hewlett Packard Enterprise Company (NYSE:HPE) is an international technology company that provides IT solutions to businesses. Their products and services include servers, storage solutions, and networking products. It generates revenue through the sale of products and services. However, management has been focused on transitioning towards a software-as-a-service model through its investment in edge-to-cloud platforms.
On December 6, 2024, CitiGroup upgraded Hewlett Packard Enterprise Company (NYSE:HPE) to Buy from Neutral, raising its price target from $23 to $26. Analysts at Citigroup expect the company’s AI revenue to continue growing at an annual rate of 25% through 2026, driven by increased adoption of innovative technologies including its cooling systems.
During the fiscal fourth quarter of 2024, the company grew its AI-related revenue by 300% year-over-year to reach $1.5 billion. Moreover, it also had a robust order pipeline of $3.5 billion as of the fourth quarter indicating a strong foothold in private cloud AI solutions. It is one of the most undervalued tech stocks to invest in now.
3. Global Payments Inc. (NYSE:GPN)
Forward P/E Ratio: 9.44
Earnings Growth: 11.69%
Number of Hedge Fund Holders: 66
Global Payments Inc. (NYSE:GPN) is a financial technology company that provides software solutions that help businesses in payment processing. The company provides various services including integrated and embedded payment systems, Point-of-Sale (POS) systems, and core payments. It operates through two main segments including Merchant and Issuer Solutions.
Global Payments Inc. (NYSE:GPN) is positioning itself as a leader in the intersection of software and payment technologies. Management has been focused on streamlining operations to simplify its business model, unify teams, and capitalize on its competitive strengths. To achieve this the company is consolidating its payment solutions under a single Genius brand. Moreover, management has also sold AdvancedMD business to Francisco Partners as part of its effort to focus on core operations and enhance capital returns.
Global Payments Inc. (NYSE:GPN) is also experiencing strong growth in its POS offerings, particularly in North America, where new account sales increased significantly. This led the Merchant Solutions revenue to grow 7% year-over-year during the fiscal third quarter of 2024. Looking ahead, management is also planning to extend its POS offerings into international markets including Mexico, Germany, and other European countries. It is one of the most undervalued tech stocks to invest in now.
Weitz Large Cap Equity Fund stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q3 2024 investor letter:
“We continued to increase the Fund’s positions in Global Payments Inc. (NYSE:GPN) and Idex Corp. during the quarter. Both stocks trade at significant discounts to our business value estimates. The companies have fundamental catalysts that could drive the stocks, but the timetable may have slipped a bit. The challenge is that investors want results now, especially in a bull market. We have specific milestones to track, and we think their achievement can be measured in quarters rather than years. In our view, the potential payoffs are well worth the wait.”
2. Western Digital Corporation (NASDAQ:WDC)
Forward P/E Ratio: 9.1
1io Earnings Growth: 366.35%
Number of Hedge Fund Holders: 66
Western Digital Corporation (NASDAQ:WDC) is one of the most undervalued tech stocks to invest in now. The company is known for manufacturing storage solutions including Hard Disk Drives (HDD), Solid State Drives (SDD), and Flash Storage Drives (FSD), all of which are critical components in cloud storage and artificial intelligence.
On January 7, Evercore ISI reiterated its Outperform rating for Western Digital Corporation (NASDAQ:WDC), maintaining its price target of $85. The analyst stated that despite a decline in the average selling price of flash drives, which is anticipated to have fallen by 6% during December 2024 and is forecasted to fall an additional 3% through March 2025. The investors will likely focus on the strength of the company’s HDD business.
HDDs account for almost 90% of the data stored in public clouds indicating their robust demand. During the fiscal first quarter of 2025, Western Digital Corporation (NASDAQ:WDC) grew its cloud segment revenue by 153% year-over-year driven by higher shipments of HDDs and SDDs.
Parnassus Mid Cap Fund stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q2 2024 investor letter:
“We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation.”
1. Micron Technology, Inc. (NASDAQ:MU)
Forward P/E Ratio: 14.82
Earnings Growth: 369.66%
Number of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) is a prominent player in the storage solutions industry. The company manufactures various types of storage devices including DRAM, NAND, NOR Flash, and SDDs. It stands out in a competitive industry based on its portfolio of patent storage technology and innovation. The company has been actively engaged in developing High-Bandwidth Memory and Low-Power DDR5X Solutions to increase its market share by 2025.
On December 16, 2024, JPMorgan reiterated its Overweight rating maintaining its price target of $180 for Micron Technology, Inc. (NASDAQ:MU). Analysts at the firms had predicted that the company would surpass revenue and EPS estimates for the fiscal first quarter of 2025. The expectation stood true as the company delivered an EPS of $1.79 beating the estimates by $0.02 and revenue of $8.71 billion (84.3% increase year-over-year) was also ahead of market consensus by $11.74 million. The revenue growth was driven by a better product mix and strong shipments related to NVDA’s H200 platform.
In addition, management has also been expanding its facilities with new investments. On January 8, Micron Technology, Inc. (NASDAQ:MU) announced a significant expansion project by breaking ground on a new High-Bandwidth Memory (HBM) advanced packaging facility in Singapore. The new facility is aimed to meet the increasing demand for memory solutions required by artificial intelligence and data centers. The company ranks as the most undervalued tech stock to invest in now.
Delaware Ivy Core Equity Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q3 2024 investor letter:
Micron Technology, Inc. (NASDAQ:MU) – Fundamentals here also appear solid though concern about global demand for handsets and PCs drove the shares down during the quarter. We expect Micron to be a significant beneficiary of growth in AI demand as investment in new data centers is extremely memory (semiconductor) intensive.”
While we acknowledge the potential of Micron Technology, Inc. (NASDAQ:MU) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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