After this week’s market turmoil, these undervalued tech stocks seem like worth buying
artificial intelligence(artificial intelligence) trading came to a sudden and hard brake over the past week, so bargain hunters may finally have an opportunity to jump in. Indeed, there may still be room for the Nasdaq 100’s recent selloff as investors consider more deeply the worst-case scenario for semiconductors if geopolitical tensions start to escalate.
Even if tensions between China and Taiwan are likely to change somewhat under President Donald Trump, the recent sell-off in chip and AI stocks seems to suggest that overly anxious investors are pessimistic about a low-probability event whose likelihood of occurring is not significantly higher than it was a week ago.
President Trump’s recent comments have left Taiwan even more uncertain about whether it can rely on the United States in the event of a Chinese invasion. This has made AI chip investors quite nervous. In any case, given the risk of Taiwan’s chip production capacity declining, President Trump’s recent comments are not cause for panic.
In this article, we explore the recent disastrous performance of tech stocks and find some interesting and undervalued tech stocks that may be worth watching as the selling pressure continues.
Taiwan Semiconductor (TSM)
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Taiwan Semiconductor (New York Stock Exchange:TSMCSemiconductor giant Intel is at the heart of the global semiconductor market. At the start of the pandemic, we saw a glimpse of the extent to which the $891 billion semiconductor manufacturing giant was disrupted by the effects of COVID-19, showing just how essential this one company is to the health of the technology industry and the global economy.
When the chip supply chain was upended a few years ago, it was hard to get hold of the latest electronics and other non-tech devices that rely heavily on modern hardware. Donald Trump has been a tough and aggressive negotiator when it comes to getting better deals for America, but it’s unclear whether he would allow Taiwan Semiconductor to fall into Chinese hands if he becomes the next president.
Of course, some geopolitical risk will always be attached to TSM stock, even if it is perceived as low risk. But if you can tolerate the risk of such adverse but low probability events (e.g., a Chinese invasion of Taiwan), Taiwan Semiconductor, down 10% from its peak, may be one of the more undervalued tech stocks. Geopolitical worries are also clouding the company’s strong, better-than-expected second quarter results.
Coursera (COUR)
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Coursera (Nasdaq:cool) is a very different type of AI business, one that’s well insulated from geopolitical risks. This little-known, mid-sized $1.1 billion online course and degree provider is leveraging new technologies like generative AI in some interesting ways.
With COUR stock near an all-time low of just over $7 per share, the undervalued tech stock also looks like a great value buy for investors who want to bet on an AI-driven edtech revolution.
Admittedly, it’s a bit of a stretch to think that AI will teach the digital universities of the future, but higher education is one of the industries poised for disruption that could greatly benefit from the cost savings that next-generation AI technologies bring.
Being at the forefront of generative AI allows Coursera to provide personalized learning experiences to students while staying on top of new technologies that are constantly being introduced in the rapidly advancing AI era.
Netflix (NFLX)
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Netflix (Nasdaq:NFLX) is a leader among video streamers that will be very difficult, if not impossible, for its peers to catch up with. The company keeps pumping out must-see content, and subscribers can’t hit the cancel button until that pipeline dries up (which won’t happen anytime soon, as new compelling sports content keeps coming).
Netflix isn’t just an ultra-sticky service: It also enjoys strong pricing power thanks to its content strategy, which far surpasses its nearest competitors.
Earlier this week, the company reported strong second-quarter results. With 8 million new subscribers, Netflix proved it can still grow despite its massive size. As the company invests more in AI personalization and content creation tools, the streaming giant may be able to further widen its lead over other streamers. For now, Netflix is king.
Sure, NFLX shares aren’t cheap at a record price-to-earnings (P/E) ratio of 44.5, but that’s the price of admission to a leading AI-powered entertainment giant that could prove incredibly resilient in the next economic downturn.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in the article. The opinions expressed in this article are solely those of the author, who owns the copyright of InvestorPlace.com. Publication Guidelines.
On the date of publication, the editor in charge did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
