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Many of the best-performing stocks come from the technology sector. Few industries offer as much opportunity for growth and expansion as technology companies. Every trillion-dollar public company is a tech giant, and it’s likely the next multi-trillion-dollar company will be in the tech industry, too.
Technology stocks make up a large portion of the S&P 500 and Nasdaq. When they fall, the entire market is affected. Fortunately, most technology stocks, including the ones mentioned in this article, have increased in value over the long term.
It’s still possible to find undervalued tech stocks, especially if you take a long-term approach to each asset. You never know what’s going to happen in a year, as macroeconomic factors, earnings reports, and other short-term events can affect stock prices. But these companies are likely poised to deliver solid profits and dividends over the next decade. Investors may want to take a closer look at these undervalued tech stocks.
Meta Platform (META)
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Meta Platforms (NASDAQ:META) is aiming to become one of the world’s leading AI companies. The company has ample capital to invest thanks to its ample cash reserves and strong financial position. The advertising giant reported a 27% year-over-year increase in first-quarter revenue and more than doubled its net income.
Meta Platforms’ “year of efficiency” has done wonders for its stock price, which is up 51% so far this year and has surged 159% over the past five years. The company has 3.24 billion daily active users and millions of advertisers, which should continue to funnel revenue into the company’s coffers.
The company’s shares are trading at a P/E ratio of 30.7%, which is reasonable given the company’s impressive net income growth rate. Meta Platforms also offers a 0.38% yield and is expected to maintain double-digit dividend growth rates for the next few years. Wall Street analysts are bullish on the stock, with a consensus rating of “Strong Buy.”
Qualcomm (QCOM)
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Qualcomm (NASDAQ:QCOM) is one of Wall Street’s favorite stocks, currently rated a “Moderate Buy,” and its high price target of $270 per share suggests the stock could rise another 30% from current levels.
The chipmaker has been riding the AI wave, helping investors post a 46% gain so far this year. Its shares are up 176% over the past five years. Qualcomm also offers a 1.64% yield and trades at a price-to-earnings ratio of 28. The tech giant has maintained high single-digit dividend growth rates for several years, including a 6.3% dividend increase this year.
Qualcomm delivered 1% year-over-year revenue growth in Q2 FY24, signaling that the company’s headwinds are now a thing of the past. Net income for the quarter was up 37% year-over-year. Growing demand for artificial intelligence could accelerate revenue in the coming quarters. Qualcomm is a relatively undervalued AI chip stock with room for further upside for long-term investors.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) derives most of its revenue from online advertising. Google and YouTube are its two most popular websites, attracting steady numbers of visitors and advertisers. But the company is diversifying its revenue, with Google Cloud now accounting for more than 10% of the company’s revenue.
First-quarter total revenue grew 15% year over year, while net income increased 57% year over year. The tech giant is cutting costs and should see further margin growth in the coming quarters.
Alphabet stock has delivered solid returns to long-term investors. Shares are up 36% so far this year and 232% over the past five years. The stock trades at a P/E of 30 and yields 0.42%. Wall Street analysts believe the stock has the potential to rise further, with a consensus rating of “Strong Buy.” The high target price of $225 per share means the stock could rise another 18%.
As of the publication date of this article, Marc Guberti holds a long position in GOOG. Opinions expressed in this article are those of the author and follow InvestorPlace.com’s disclosure guidelines.
As of the publication date, the editor held a long position in GOOG.
Marc Guberti is a financial freelance writer for InvestorPlace.com and host of the Breakthrough Success Podcast. He has contributed to several publications, including U.S. News & World Report, Benzinga, and Joy Wallet.
