Valuations for some tech stocks remain attractive in the face of growing concerns about an artificial intelligence-driven tech bubble. Big tech stocks have had a strong year, with gains continuing into the end of the year on hopes of profit growth from artificial intelligence and lower borrowing costs from the Federal Reserve’s interest rate cuts. The Nasdaq hit a new record on Tuesday, with shares of Apple, Tesla, Google parent Alphabet, Tesla and chip maker Broadcom all rising to record highs. Against this backdrop, we look for cheap tech stocks that investors might consider. The following stocks meet the following criteria: Trade at a discount relative to their industry and its subsectors Analysts’ average 12-month price target is above current prices, according to FactSet Gain more than 5% in the past month Take a look at using The following company names show up in FactSet data: Electronic signature software company Docusign is considered cheap given its price-to-earnings ratio relative to its sector and industry, but the recent stock price jump shows little upside, according to analysts’ consensus target. Docusign shares are up 27% in the past month after the company posted strong results and upbeat fourth-quarter guidance. IBM spin-off Kyndryl, the world’s largest provider of IT infrastructure services, also appeared on the screen. Shares are up about 70% this year and could rise another 7%, according to consensus price targets compiled by FactSet. Bank of America is more bullish, starting late last month with a buy rating and $40 price target on Kyndryl, implying a potential upside of 13%. “Since its spinoff from IBM in 2021, the company has been working hard to cultivate an increasingly profitable business and plans to Return to organic constant currency growth. “We believe the improving mix and growth trends are not fully reflected in KD’s current P/E ratio versus peers and see room for further upside.” Enphase Energy and First Solar were also cited. Considered quite cheap, its forward price-to-earnings ratios over the next 12 months are 20.4 and 9.8 respectively. Both stocks have suffered heavy losses this season as investors worry that President-elect Trump will implement policies to reverse the Biden administration’s support for renewable energy. Enphase shares are down about 44% this year, while First Solar is up 12% on the prospect that the company can power data centers in desperate need of artificial intelligence. But analysts polled by FactSet predicted big gains for both stocks. Enphase and First Solar are also believed to be able to “grow at a reasonable price.” Deutsche Bank reiterated its buy rating on First Solar on Tuesday, saying the company “should further benefit from its unique position as a U.S. utility solar panel manufacturer and will benefit first from impending tariffs on China.” UBS Similar sentiments were expressed earlier this year. Companies such as Vishay Intertechnology, Dolby Laboratories and Akamai Technologies also appear at the top of the screen.
