Artificial intelligence was the dominant story in the tech market in 2024, driving significant gains in tech stocks. The rapid advancements in AI have been a catalyst for business value, which has been reflected in the stock market performance of companies directly involved in this technology. Another major driver of the outperformers was the crypto industry. The launch of spot bitcoin exchange-traded funds in January 2024 marked the beginning of a big year for cryptocurrencies, which was further bolstered by Donald Trump’s election victory in November.
However, on January 13, CNBC reported that major tech stocks faced pressure, as the specter of higher inflation drove up Treasury yields and dampened expectations for potential Federal Reserve rate cuts this year. Higher yields increase the cost of capital and can lower both consumer spending and corporate investment. The sell-off in tech stocks extended beyond the megacap tech giants, with quantum computing stocks seeing significant drops. The broader market was also affected, with the S&P 500 and Nasdaq Composite each dropping more than 1%, following a hotter-than-expected jobs report and rising inflation expectations among consumers.
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In an interview with CNBC on January 13, Daniel Ives, Global Head of Technology Research at Wedbush Securities, discussed the current state and future prospects of the tech sector, particularly in the context of rising interest rates and a strong dollar. Ives highlighted that the bull market in tech is only halfway through. He argued that strong consumer demand and capital expenditures (CapEx) in artificial intelligence (AI) are driving the sector’s growth, making market dips opportunities to invest in tech stocks. Ives believes that the fundamental strength of tech companies, especially in AI, will continue to drive positive performance and suggests a diversified approach to investing in tech. Ives also discussed the broader market dynamics, including the potential for the Federal Reserve to remain hawkish at its next meeting. He views the current environment as an opportunity to own the winners in the tech sector.
The technology sector continues to offer compelling opportunities for investors seeking value and long-term growth. As the market fluctuates, undervalued stocks offer a critical strategy for maximizing returns. With that in context, let’s take a look at the top 10 undervalued tech stocks to buy according to hedge funds.
Source: Pixabay
Our Methodology
To compile our list of the top 10 undervalued tech stocks to buy according to hedge funds, we used Finviz and Yahoo stock screeners to find the 40 largest technology companies trading below the forward P/E ratio of 15 as of January 13. We then used Insider Monkey’s Hedge Fund database to rank 10 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
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).
Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds
10. Seagate Technology Holdings plc (NASDAQ:STX)
Number of Hedge Fund Investors: 46
Forward P/E Ratio as of January 13: 12.27
Seagate Technology Holdings plc (NASDAQ:STX) is a leading provider of data storage solutions, specializing in hard disk drives (HDDs) and solid-state drives (SSDs). The company serves a diverse range of customers, including cloud service providers, enterprises, and consumers, and delivers high-performance, reliable, and cost-effective storage solutions.
Seagate Technology Holdings plc (NASDAQ:STX) has made significant strides in the qualification of its Heat-Assisted Magnetic Recording (HAMR) technology, a critical advancement in data storage aimed to increase the amount of data that can be stored on a magnetic device by temporarily heating the disk material during writing. The company is now focusing on boosting its HAMR production and sales. HAMR technology is particularly valuable for cloud service providers that require vast amounts of storage. The company has successfully qualified HAMR with a major cloud customer and plans to qualify several additional cloud customers by mid-2025.
Furthermore, Seagate Technology Holdings plc (NASDAQ:STX) is continuously working to optimize its manufacturing processes to meet the strong demand for storage solutions. The company has faced challenges in scaling production, particularly in converting work-in-progress into finished goods. Seagate Technology Holdings plc (NASDAQ:STX) remains committed to improving its manufacturing efficiency by recalibrating and requalifying equipment. The company aims to maintain a high level of production without the need for significant new capacity investments.
9. TD SYNNEX Corporation (NYSE:SNX)
Number of Hedge Fund Investors: 46
Forward P/E Ratio as of January 13: 10.62
TD SYNNEX Corporation (NYSE:SNX) is a global distributor of IT products and solutions, serving a wide range of resellers and system integrators. The company operates in over 100 countries and connects technology vendors with partners.
TD SYNNEX Corporation (NYSE:SNX) is actively investing in high-growth technologies such as cloud, cybersecurity, data and analytics, and artificial intelligence. The company’s cloud platform, StreamOne integrates with vendors and hyperscaler marketplaces by providing customers with access to thousands of vendors and powerful capabilities such as real-time reporting, financial operations, and security operations. TD SYNNEX Corporation (NYSE:SNX) is also expanding its hyperscale infrastructure business, Hyve, to address the growing demand for data center solutions driven by cloud adoption and AI. Hyve is investing in new capabilities such as liquid cooling and power management, which are essential for supporting the next generation of data centers.
TD SYNNEX Corporation (NYSE:SNX) remains intensely focused on achieving profitable growth and maintaining operational excellence. The company is committed to generating consistent free cash flow and making disciplined capital allocation decisions. The company is also building enablement solutions for higher-margin services businesses to help customers meet the increasing demand for specializations and certifications.
8. Fidelity National Information Services, Inc. (NYSE:FIS)
Number of Hedge Fund Investors: 56
Forward P/E Ratio as of January 13: 13.48
Fidelity National Information Services, Inc. (NYSE:FIS) provides financial technology solutions to a diverse range of clients, including banks, merchants, and capital markets firms. The company’s solutions are designed to help financial institutions and businesses manage their core operations, payments, and risk management more efficiently and securely.
Fidelity National Information Services, Inc. (NYSE:FIS) recently acquired Dragonfly Technologies, a digital solutions provider specializing in cyber security, enterprise networks, and automation, to enhance its digital offerings and expand its footprint in the digital banking space. Dragonfly’s suite of solutions complements the company’s existing Digital One portfolio and aims to strengthen the company’s position in the digital banking market. The acquisition is also expected to open new cross-sell opportunities with existing clients, particularly large regional banks and complex commercial customers.
Fidelity National Information Services, Inc. (NYSE:FIS) is also investing in research and development and is launching new solutions along with enhancement in existing solutions. The company has recently introduced next-generation treasury solutions in partnership with leading AI companies, which are designed to help financial institutions manage risk more effectively. Additionally, the company’s premium payback loyalty offering has gained significant traction, with new partnerships across various sectors, including technology, retail, and financial services.
7. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC)
Number of Hedge Fund Investors: 57
Forward P/E Ratio as of January 13: 13.00
SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is a leading provider of financial services and healthcare technology that offers a broad array of solutions to a diverse client base. The company’s robust portfolio includes asset and wealth management, fund administration, and healthcare technology. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) earns revenue through licensing fees, subscription models, and consulting services.
SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is focusing on strategic acquisitions and the effective integration of these acquisitions into its existing business. The company recently acquired Battea-Class Action Services, a leader in filing and processing settlement claims in connection with antitrust and securities litigation, for $670 million. The acquisition has added significant value to the company’s fund administration business and is already showing positive signs of synergy. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) aims to leverage Battea’s offerings to cross-sell its services to existing clients, thereby expanding its reach and enhancing its service portfolio. Additionally, the acquisition of Blue Prism, a Robotic Process Automation company, has enabled SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) to automate and optimize processes by increasing efficiency and productivity.
SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is also actively expanding its market opportunities and client base by targeting both existing and new segments. In the healthcare sector, the company is leveraging its DomaniRx platform to address the growing needs of health insurers and pharmacy benefit managers. The company is also exploring the potential to license its technology to larger players, further extending its reach.
6. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Investors: 60
Forward P/E Ratio as of January 13: 12.36
Dell Technologies Inc. (NYSE:DELL) is a leading provider of IT infrastructure, software, and services. The company has a 40-year history of innovation and operational excellence. Dell Technologies Inc. (NYSE:DELL) serves a diverse range of customers, from small and medium-sized businesses to large enterprises and governments.
Dell Technologies Inc. (NYSE:DELL) is committed to driving future growth through several strategic initiatives. One area of focus is specialized hardware and integrated solutions designed to meet the unique demands of AI workloads. The company is expanding its AI server portfolio and is offering the industry’s first enterprise-ready GB200 NVL72 server racks with a direct liquid cooling capacity of up to 72 GPUs per rack. The company’s AI servers and related solutions, such as power management, cooling solutions, network switches, and professional services, are designed to meet the complex and high-value engineering needs of AI deployments and ensure efficient implementation.
Furthermore, Dell Technologies Inc. (NYSE:DELL) is investing in storage and networking solutions. The company is enhancing its PowerStore, PowerFlex, and PowerScale portfolios to meet the evolving needs of its customers. Recent updates include the introduction of the PowerScale F710, which offers 614TB capacity density per rack unit, and a new software release that aims to boost write performance by 163% and read performance by over 2x. These innovations are designed to address the growing demand for high-performance and scalable storage solutions, particularly in the context of AI and big data applications.
5. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Investors: 64
Forward P/E Ratio as of January 13: 10.49
Hewlett Packard Enterprise Company (NYSE:HPE) specializes in enterprise-grade IT solutions, including servers, storage, and networking products. The company generates revenue from product sales and recurring services, such as cloud and IT management. Hewlett Packard Enterprise Company (NYSE:HPE) is transitioning to an as-a-service model, investing in edge-to-cloud platforms, and forming strategic alliances to accelerate digital transformation for its customers.
Hewlett Packard Enterprise Company (NYSE:HPE) is at the forefront of the AI revolution, with a strong focus on developing and delivering AI systems that meet the diverse needs of its customers. The company recently introduced industry-first technologies, such as the 100% fanless direct liquid cooling architecture and the 400 gigabits HPE Slingshot Direct Liquid Cool networking fabric. These advancements aim to enhance the performance of AI systems and supercomputing product lines.
Hewlett Packard Enterprise Company (NYSE:HPE) has launched the Unleash AI Partner Program, a program designed to connect businesses with software providers, system integrators, and service providers to accelerate the adoption of AI solutions by providing access to the company’s Private Cloud AI platform. The platform also allows customers to easily implement and manage full-stack AI solutions through a curated network of validated partners for companies to leverage pre-vetted partners to quickly deploy AI applications.
4. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Investors: 66
Forward P/E Ratio as of January 13: 8.23
Global Payments Inc. (NYSE:GPN) is a leading provider of payment technology and software solutions for merchants, issuers, and consumers. Global Payments Inc. (NYSE:GPN) has a robust portfolio of products and services, including point-of-sale (POS) systems, integrated and embedded payments, and core payments solutions, as well as issuer solutions for financial institutions. The company earns revenue through transaction fees and software subscriptions.
Global Payments Inc. (NYSE:GPN) is actively refocusing its strategy to streamline and simplify its operations to play to its competitive strengths. The company is consolidating its POS assets under the Genius brand and extending them globally, which will enhance its ability to grow, drive efficiency, and accelerate value delivery for partners and clients. This consolidation is expected to improve the company’s return on invested capital and create a more unified and cohesive go-to-market approach.
Additionally, Global Payments Inc. (NYSE:GPN) is concentrating its investments on the assets and verticals that will be most impactful for driving growth and capturing market share. By better connecting its leading commerce enablement solutions with its POS and software environments, the company aims to deliver a more frictionless experience and drive higher returns.
To further enhance its distribution capabilities, Global Payments Inc. (NYSE:GPN) is expanding its reach through a variety of channels, including direct sales, strategic partnerships, joint ventures, and indirect relationships. The company is particularly focused on growing its integrated and embedded payments business by adding new partners to its ecosystem.
3. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Investors: 66
Forward P/E Ratio as of January 13: 7.89
Western Digital Corporation (NASDAQ:WDC) is a leading technology company that specializes in the development, manufacture, and distribution of data storage solutions. The company offers a comprehensive portfolio of hard disk drives (HDDs), solid-state drives (SSDs), and other data storage technologies. Western Digital Corporation (NASDAQ:WDC) serves a diverse range of end markets, including data centers, cloud computing, consumer electronics, and enterprise applications.
Western Digital Corporation (NASDAQ:WDC) is executing a strategic plan to separate its Flash and HDD businesses, a move aimed at unlocking shareholder value and enhancing operational focus. The company has completed the soft-spin phase, during which it has successfully separated its systems and processes into two distinct stacks. This initiative is designed to ensure that both businesses can operate independently. The separation is expected to be completed by the end of the second quarter of fiscal 2025.
In the HDD segment, Western Digital Corporation (NASDAQ:WDC) is leveraging its UltraSMR (Shingled Magnetic Recording) technology to maintain its leadership position. UltraSMR enables the company to produce the industry’s highest-capacity hard drives, offering unmatched reliability, quality, and performance. The company recently launched the 32 TB UltraSMR and 26 TB CMR drives, which are the world’s first commercially available hard drives with 11 disks. The adoption of UltraSMR by key cloud customers is expanding, and the company expects this technology to drive continued gross margin improvement and revenue growth.
2. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Investors: 74
Forward P/E Ratio as of January 13: 13.79
QUALCOMM Incorporated (NASDAQ:QCOM) is a global leader in wireless technology and semiconductor solutions, with a focus on mobile devices, automotive, and IoT. The company generates revenue through chipset sales and licensing fees for its intellectual property.
QUALCOMM Incorporated (NASDAQ:QCOM) is focusing on capitalizing on the growing demand for on-device artificial intelligence (AI) and edge computing. The company recognizes the transformative potential of edge AI in enhancing the human-computer interface to provide context, immediacy, and personalization while ensuring privacy and security. At the recent Snapdragon Summit, QUALCOMM Incorporated (NASDAQ:QCOM) showcased its vision for AI-enabled edge computing and announced partnerships with Meta to support Llama 3.2 on Snapdragon-powered devices and with Amazon to create a cloud-to-edge solution for customizing and deploying AI models. The company also introduced the Snapdragon 8 Elite, which features a second-generation custom Oryon CPU and a newly architected hexagon NPU to deliver cutting-edge AI capabilities in mobile devices.
Additionally, QUALCOMM Incorporated (NASDAQ:QCOM) is also expanding its presence in the Industrial IoT (IIoT) market with the launch of the Qualcomm IQ Series and the IoT Solutions Framework. These offerings are designed to meet the needs of next-generation industrial edge applications to provide solutions for inspection, automation, robotics, and advanced computer vision. The company has integrated connectivity and computing power in its Networking Pro A7 Elite Platform, which aims to further enhance the company’s capabilities in edge networking.
1. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Investors: 107
Forward P/E Ratio as of January 13: 13.26
Micron Technology, Inc. (NASDAQ:MU) is a global leader in memory and storage solutions, including DRAM, NAND, NOR flash memory, and solid-state drives (SSDs). The company provides products to customers in the data center, PC, graphics, networking, and automotive markets.
Micron Technology, Inc. (NASDAQ:MU) is at the forefront of developing high-bandwidth memory (HBM) and low-power DDR5X (LPDDR5X) solutions, which are critical for advanced computing and data center applications. The company is investing in facility expansions of its HBM capacity, with the goal of achieving natural bit share in the second half of 2025. This includes investments in front-end fabs, assembly, test processes, and cleanroom capabilities. Micron Technology, Inc.’s (NASDAQ:MU) HBM3E and 12-high HBM products are in high demand.
Additionally, Micron Technology, Inc. (NASDAQ:MU) is expanding its facilities with a new investment in India, to support its back-end operations. These investments are crucial for sustaining the company’s leadership in advanced memory technologies and ensuring that it can meet the growing demand from data centers, AI, and other high-growth segments.
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 timeframe. 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.
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