Top 12 Undervalued Tech Stocks According to Wall Street Analysts
In this piece, we will take a look at the top 12 undervalued technology stocks according to Wall Street analysts. If you want to skip our introduction to the technology sector, the stock market, and the latest details about the U.S. economy, then head on over to Top 5 Undervalued Tech Stocks According to Wall Street Analysts.
The technology industry has been at the center of the stock market and the economy this year. As tech stocks tumbled in 2022 after inflation and interest rates soared, investors had quite an appetite for the stocks this year as evidenced by the massive bull run in technology dominated stock indexes in 2023. The tech sector was helped particularly by the growing interest in artificial intelligence and associated technologies, and shifting investor sentiments about an impending recession in America has also helped the sector. Technology firms tend to do well in a growing economy as their products are generally more sensitive to spending patterns. More discretionary income for customers allows them to make pricier tech purchases, and a loose capital environment also helps firms expand their technology infrastructure to set up data centers, cloud computing divisions, and other facilities.
However, after major technology firms saw their share prices more than double during the first half of this year and the tech heavy NASDAQ 100 index posted 45% gains during the same time period, there are worries that the rally might be over and the second half might not prove to be similarly lucrative in providing stock market returns. From the 11th of July to the 11th of August, the NASDAQ 100 has posted a mere 0.06% in returns as it has gained only 9.78 points. August has seen several data releases that not only show that the Federal Reserve's aggressive interest rate hikes to reduce inflation are working, but also that there might be some strength left in some segments that might incentivize the central bank to raise interest rates more.
The most important data release for the month is the Labor Department's Consumer Price Index (CPI). This is the report for inflation and the latest data shows that in July, prices rose by 0.2% - for a rate that stood flat over the June figures. Annually, the inflation stood at 3.2% in the month, for a small 0.2% decrease over June's annual figures but this was expected by analysts. Crucially, and especially when it comes to potential future interest rate increases by the Federal Reserve, core inflation came in at 4.7% - which was lower than the Dow Jones estimate of 4.8%. The biggest contributors to inflation in America in June 2023 were elevated shelter and transportation services prices, which grew by 7.7% and 9% on an annual rate, respectively.
Narrowing our focus down on the technology industry, right now a crucial earnings season is underway. These earnings reports will show how resilient technology companies have been in a high rate environment and whether a slowdown in inflation will help them in the revenue department. One firm seems to have benefited from a growing interest in artificial intelligence and new chip making technologies. The Taiwan Semiconductor Manufacturing Company (NYSE:TSM), which is the world's largest contract chip manufacturer, has reported its revenue figures for July. The data shows that TSMC's month on month revenue grew by 14% during the month, which was a pleasant surprise as the figures typically drop during this time period since TSMC's customers ramp up their orders later during the year. However, annually, the Taiwanese chip maker's revenue still dropped by 4.9% since the semiconductor sector is currently in a slowdown due to excess channel inventory which has to be digested before more products can be manufactured and shipped to consumers.
Another firm that reported its earnings in August is the Cupertino, California consumer technology giant Apple Inc. (NASDAQ:AAPL). Apple's revenue dropped by roughly $1 billion annually in the quarter ending in June, with its net sales during the first nine months of fiscal year 2023 dropping by ~$10 billion. However, Apple's net income did grow in the quarter, aided primarily by a reduction in operating expenses.
Apple's chief financial officer Luca Maestri explained the impact technology is having on a variety of industries during the firm's latest earnings call where he shared:
This past quarter, we reached an important milestone and passed 1 billion paid subscriptions across the services on our platform, up 150 million during the last 12 months and nearly double the number of paid subscriptions we had only 3 years ago. And finally, we continue to improve the breadth and the quality of our current services. From 20 new games on Apple Arcade, to brand-new content on Apple TV+, to the launch of our high-yield savings account with Apple Card, our customers are loving these enhanced offerings. Turning to the enterprise market. Our customers are leveraging Apple products every day to help improve productivity and attract talent. Blackstone, a global investment management firm, is expanding its Apple footprint from their corporate iPhone fleet to now offering the MacBook Air powered by M2 to all of their corporate employees and portfolio companies.
Gilead, a leading biopharmaceutical company, has deployed thousands of iPads globally to their sales team. Over the last 6 months, they have also doubled their Mac user base by making MacBook Air available to more employees with a focus on user experience and strong security.
With these details in mind, let's take a look at some undervalued technology stocks according to analysts, with the top ones being Calix, Inc. (NYSE:CALX), Nuvei Corporation (NASDAQ:NVEI), and Aviat Networks, Inc. (NASDAQ:AVNW).
Photo by Adam Nowakowski on Unsplash
Our Methodology
To compile our list of the most undervalued technology stocks according to analysts, we ranked stocks by the difference between their current share price and average share price target.
Top 12 Undervalued Tech Stocks According to Wall Street Analysts
12. Consensus Cloud Solutions, Inc. (NASDAQ:CCSI)
Share Price Upside: 50.67%
Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) is a software company that provides data collection and analysis services to the healthcare sector. The shares have a sizeable upside since its average share price target is $47.40.
By the end of this year's first quarter, 13 of the 943 hedge funds part of Insider Monkey's database had bought Consensus Cloud Solutions, Inc. (NASDAQ:CCSI)'s shares. The firm's largest shareholder is Jeffrey Gates' Gates Capital Management with a $62 million stake.
Along with Calix, Inc. (NYSE:CALX), Nuvei Corporation (NASDAQ:NVEI), and Aviat Networks, Inc. (NASDAQ:AVNW), Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) is an undervalued technology stock according to analysts.
11. Enphase Energy, Inc. (NASDAQ:ENPH)
Share Price Upside: 53.07%
Enphase Energy, Inc. (NASDAQ:ENPH) is a solar technology company that sells power conversion and monitoring projects. Truist and Goldman Sachs maintained Buy ratings on the shares in July 2023, and the average share price target is $208.88.
As of March 2023, 55 of the 943 hedge funds surveyed by Insider Monkey had invested in the firm. Jim Simons' Renaissance Technologies is Enphase Energy, Inc. (NASDAQ:ENPH)'s largest shareholder in our database, with an investment worth $198 million.
10. Digi International Inc. (NASDAQ:DGII)
Share Price Upside: 57.85%
Digi International Inc. (NASDAQ:DGII) is an American firm that sells a variety of connectivity products enabling firms to run their logistics operations, data warehouses, and more. The stock is rated Strong Buy on average and has an average share price target of $47.86.
19 of the 943 hedge funds part of Insider Monkey's Q1 2023 survey had bought a stake in Digi International Inc. (NASDAQ:DGII). Richard Driehaus's Driehaus Capital is the largest hedge fund shareholder through a $32 million investment.
9. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Share Price Upside: 61.14%
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is a Chinese solar company with close to fifty thousand employees and close to 200 gigawatts of solar product capacity. The average share price target is $60.30.
After digging through 943 hedge funds for their investments during this year's first quarter, Insider Monkey discovered that 16 had invested in the firm. JinkoSolar Holding Co., Ltd. (NYSE:JKS)'s largest investor among these is Paul Marshall and Ian Wace's Marshall Wace LLP with a $24.3 million stake.
8. Impinj, Inc. (NASDAQ:PI)
Share Price Upside: 65.62%
Impinj, Inc. (NASDAQ:PI) is a technology firm that provides products that enable retailers to track their packages during checkout, shipping, and other processes. The firm's shares currently have an average share price target of $92.
Insider Monkey's first quarter of 2023 survey covering 943 hedge funds revealed that 28 had held a stake in Impinj, Inc. (NASDAQ:PI). Out of these, the firm's largest investor is Daniel Patrick Gibson's Sylebra Capital Management with a $385 million stake.
7. Alteryx, Inc. (NYSE:AYX)
Share Price Upside: 67.96%
Alteryx, Inc. (NYSE:AYX) provides data analytics and data management software products and services. The stock's been having a great August so far, with Truist and Citigroup maintaining Buy ratings and Oppenheimer rating it as Outperform.
By the end March 2023, 42 of the 943 hedge funds polled by Insider Monkey had bought Alteryx, Inc. (NYSE:AYX)'s shares. Brian Bares' Bares Capital Management is the biggest shareholder courtesy of its $125 million investment.
6. Viasat, Inc. (NASDAQ:VSAT)
Share Price Upside: 72.46%
Viasat, Inc. (NASDAQ:VSAT) is a satellite internet connectivity provider that serves individuals, businesses, and governments. The shares are rated Buy on average and have a 72.46% upside.
Insider Monkey took a look at 943 hedge funds for their March quarter of 2023 investments and found out that 13 had owned a stake in the company. Viasat, Inc. (NASDAQ:VSAT)'s biggest investor is Seth Klarman's Baupost Group since it owns 16.2 million shares that are worth $551 million.
Nuvei Corporation (NASDAQ:NVEI), Viasat, Inc. (NASDAQ:VSAT), Calix, Inc. (NYSE:CALX), and Aviat Networks, Inc. (NASDAQ:AVNW) are some undervalued technology stocks according to Wall Street analysts.
Click to continue reading and see Top 5 Undervalued Tech Stocks According to Wall Street Analysts.
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Disclosure: None. Top 12 Undervalued Tech Stocks According to Wall Street Analysts is originally published on Insider Monkey.