In this article, we will be taking a look at the 5 Best Cheap Technology Stocks to Invest In. To read our analysis of the recent technology trends, and market activity as well as the risk/reward and methodology of this list, you can go to the 10 Best Cheap Technology Stocks to Invest In.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a leading technology company focused on the designing, manufacturing, and marketing of smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services.
Major products of Apple Inc. (NASDAQ:AAPL) include the iPhone, Mac PCs, iPad, and accessories while service offerings include Apple Care, Cloud Services, Digital Content and Payment services. iPhone sales accounted for more than half of its revenue in the last fiscal year. The company announced the launch of iPhone 14 in the first week of September which could result in a surge in the company’s revenue.
Despite the bloodbath in the technology sector, Apple Inc. (NASDAQ:AAPL) shares have only lost 15.28% of their value since the beginning of the year, as of September 26. The tech giant currently trades at a forward P/E ratio of 23.34 and offers up to 21% upside potential from the current price levels based on the average analyst price target of $182.01.
On September 20, Evercore ISI analyst Amit Daryanani raised the price target on Apple Inc. (NASDAQ:AAPL) shares to $190 from $185, with an ‘Outperform’ rating. The analyst sees “modest unit upside” compared to low-single digit Street expectations, although average selling prices “could surprise materially”.
Apple Inc. (NASDAQ:AAPL) is among the favorites of hedge funds, with 128 of the 895 hedge funds tracked by Insider Monkey holding its shares valued at a whopping $143 billion. Warren Buffet’s Berkshire Hathaway is its biggest shareholder with ownership of 894.8 million shares valued at $122.3 billion.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG), based in Mountain View, California, is the parent company of several companies including the Google, Verily Life Sciences, GV (formerly Google Ventures), Calico, and X-the moonshot factory. Majority of its revenue is generated by Google Services which comprises of ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.
Alphabet Inc. (NASDAQ:GOOG) announced the release of Android 13 earlier in August, adding multiple new features focused on personalization and privacy.
As of September 26, Alphabet Inc. (NASDAQ:GOOG) shares have lost significant value since the beginning of the year as the shares were down 31.46% YTD, trading at a forward P/E ratio of 16.78. Analysts maintain bullish sentiments for the search engine operator, with an average price target of $148.95 for its shares, representing 51% upside potential to the current price.
Alphabet Inc. (NASDAQ:GOOG) is one of the most commonly owned stock among the 895 hedge funds tracked by Insider Monkey. As of Q2 2022, 153 hedge funds owned shares of Alphabet Inc. (NASDAQ:GOOG), valued at $22.3 billion.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Menlo Park, California-based Meta Platforms, Inc. (NASDAQ:META) is a technology conglomerate focused on building products and services that help people connect and communicate. Formerly known as Facebook, Inc., the tech conglomerate reports its business under two segments: Family of Apps – comprising social media web and smartphone apps Facebook, Instagram, Messenger, and WhatsApp; and Reality Labs – comprising augmented and virtual reality products including hardware, software, and content.
As of September 26, Meta Platforms, Inc. (NASDAQ:META) has lost 58.25% of the share value since the beginning of the year and trades at a forward P/E ratio of 12.67. The $226.23 average analyst price target suggests 66% upside potential, however.
In August, Morgan Stanley analyst reduced the price target on Meta Platforms, Inc. (NASDAQ:META) shares from $280 to $225, while Loop Capital lowered the price target from $180 to $165.
Meta Platforms, Inc. (NASDAQ:META) is among hedge funds’ favorites as 184 of the 895 hedge funds tracked by Insider Monkey hold its shares valued at a combined total of $18.2 billion.
Here is what Alger Capital specifically said about Meta Platforms, Inc. (NASDAQ:META):
“Meta Platforms, Inc. (NASDAQ:META) operates Facebook, the world’s largest social network. The digital advertising industry is taking market share of advertising dollars from print, radio, and tv media. However, concerns about brand risk, or having advertisements appear alongside of controversial content, caused brands and agencies to move budgets away from meta, resulting in disappointing revenue. Diminished ad tracking capability relative to consumer opt-out also weighed upon sentiment for meta shares. Meta’s share performance responded favorably, however, to first quarter results that that while not strong fundamentally, were positive against extremely low expectations among some investors. The positive contribution to portfolio performance was due to a sequential quarterly increase in customer utilization and management lowering its expense guidance $3 billion in order to protect earnings. In a market environment that is rewarding companies with relatively high current earnings, we believe Meta’s spending discipline resonated with investors.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN), is a multinational technology company operating online and physical stores where it sells its own products as well as allows third-party sellers to sell their products to consumers. It manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and develops and produces media content; and provides cloud computing services through Amazon Web Services platform. Its ecommerce platform is home to more than 1.7 million small and medium businesses.
As of September 26, Amazon.com, Inc. (NASDAQ:AMZN) shares are down by 31.75% YTD and trade at a forward P/E ratio of 49.23. Despite the stock decline, the average analyst price target of $171.18 represents a 49% upside potential based on current price.
Amazon.com, Inc. (NASDAQ:AMZN) is also highly sought after by hedge funds with the second highest number of hedge funds as 252 out of the 895 tracked by Insider Monkey hold its shares with a total value of $30.1 billion. The ecommerce giant ranks #2 on the list 10 stocks to buy now according to billionaire David Tepper based on the number of hedge funds invested in the stock.
Oakmark Funds, an investment management firm, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter of 2022 investor letter. Here’s what they said:
“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Redmond, Washington-based Microsoft Corporation (NASDAQ:MSFT) is a leading technology company with products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. Microsoft Corporation (NASDAQ:MSFT) boasts over 1.4 billion monthly active devices running its flagship operating system, Windows 10 or 11.
As of September 26, Microsoft Corporation (NASDAQ:MSFT) shares have lost 29.26% of their value on year-to-date basis and trade at a forward P/E ratio of 19.91. Majority of analysts are bullish about the prospects of Microsoft Corporation (NASDAQ:MSFT) as they hold an average price target of $332.31, 40% higher than the current price.
On September 20, board of directors of Microsoft Corporation (NASDAQ:MSFT) declared a quarterly dividend of $0.68 per share, reflecting a 10% increase over the previous quarter’s dividend. Following the announcement, Morgan Stanley analyst Keith Weiss said the dividend hike highlights the stock’s “durable high-teens total return profile” when factored along with Microsoft’s high-teens percentage EPS growth. The analyst maintains an ‘Overweight’ rating and a price target of $354 for the shares.
As of Q2 2022, Microsoft Corporation (NASDAQ:MSFT) is the most sought-after stock among the 895 hedge funds tracked by Insider Monkey as 258 of these hedge funds held shares in the software giant, valued at $56 billion.
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