2 Cheap Tech Stocks to Buy Right Now
Monday, Nov 11, 2024 8:11 am ET
2min read In today's rapidly evolving tech landscape, it's crucial to identify undervalued opportunities that generate stable profits and cash flows. While artificial intelligence (AI) may seem like the hottest trend, focusing on income-generating tech stocks can provide a more reliable return on investment. This article highlights two cheap tech stocks that offer compelling value and potential for long-term growth.
1. Apple (AAPL)
Apple, the world's most valuable company, is often overlooked in the tech sector due to its size. However, its shares are currently trading at a forward price-to-earnings ratio of 29, which is cheaper than the broader technology sector's average P/E ratio of 33. Apple's strong financial performance and recent advancements in AI make it an attractive investment opportunity.
In the fourth quarter of 2023, Apple reported revenue growth of 6% to $96.4 billion, driven by a 6% increase in iPhone sales. The company's recent iOS update, which includes Apple Intelligence, is expected to generate an upgrade cycle among consumers, with Counterpoint Research estimating that 50 million iPhone 12 users are eager for an upgrade. This could translate to a boom in AI smartphone demand, reaching 912 million smartphones by 2028, according to IDC.
Apple's AI strategy focuses on integrating AI into its existing products and services, rather than developing standalone AI hardware. This approach allows Apple to leverage its extensive user base and ecosystem to drive AI adoption. By capitalizing on undervaluations created by market perceptions, investors can benefit from Apple's stable yields and potential for capital gains.
1. Alphabet (GOOG, GOOGL)
Alphabet, the parent company of Google, has been integrating AI into its core products and services, such as Google Workspace and Search. This widespread adoption of AI has enhanced user experience and created new revenue streams. In the third quarter of 2023, Alphabet reported a 15% increase in revenue to $88.3 billion, with AI playing a crucial role.
All seven of Alphabet's core products and platforms now use Gemini models, reaching more than 2 billion monthly users. The company's AI initiatives are expected to drive growth, and its relatively cheap price-to-earnings ratio of 22.7, compared to the S&P 500's 27.8, presents an attractive buying opportunity.
Alphabet's AI development strategy relies on acquisitions and partnerships to maintain its competitive edge. In 2023, the company acquired a majority stake in Anthropic, an AI safety and alignment research company. Additionally, Alphabet has partnered with various organizations to collaborate on AI research and development, solidifying its position in the AI landscape.
Alphabet's AI strategy addresses potential ethical concerns and regulatory challenges through initiatives such as establishing an AI ethics board and committing to transparency and accountability in its AI practices. These efforts demonstrate Alphabet's commitment to responsible AI development, which should contribute to its long-term growth and maintain investor confidence.
In conclusion, investing in cheap tech stocks like Apple and Alphabet offers a more reliable return on investment than speculative AI ventures. By focusing on income-generating tech stocks with stable profits and cash flows, investors can capitalize on undervaluations created by market perceptions and secure steady returns. As the tech sector continues to evolve, these two companies remain well-positioned to generate long-term growth and provide attractive investment opportunities.
1. Apple (AAPL)
Apple, the world's most valuable company, is often overlooked in the tech sector due to its size. However, its shares are currently trading at a forward price-to-earnings ratio of 29, which is cheaper than the broader technology sector's average P/E ratio of 33. Apple's strong financial performance and recent advancements in AI make it an attractive investment opportunity.
In the fourth quarter of 2023, Apple reported revenue growth of 6% to $96.4 billion, driven by a 6% increase in iPhone sales. The company's recent iOS update, which includes Apple Intelligence, is expected to generate an upgrade cycle among consumers, with Counterpoint Research estimating that 50 million iPhone 12 users are eager for an upgrade. This could translate to a boom in AI smartphone demand, reaching 912 million smartphones by 2028, according to IDC.
Apple's AI strategy focuses on integrating AI into its existing products and services, rather than developing standalone AI hardware. This approach allows Apple to leverage its extensive user base and ecosystem to drive AI adoption. By capitalizing on undervaluations created by market perceptions, investors can benefit from Apple's stable yields and potential for capital gains.
1. Alphabet (GOOG, GOOGL)
Alphabet, the parent company of Google, has been integrating AI into its core products and services, such as Google Workspace and Search. This widespread adoption of AI has enhanced user experience and created new revenue streams. In the third quarter of 2023, Alphabet reported a 15% increase in revenue to $88.3 billion, with AI playing a crucial role.
All seven of Alphabet's core products and platforms now use Gemini models, reaching more than 2 billion monthly users. The company's AI initiatives are expected to drive growth, and its relatively cheap price-to-earnings ratio of 22.7, compared to the S&P 500's 27.8, presents an attractive buying opportunity.
Alphabet's AI development strategy relies on acquisitions and partnerships to maintain its competitive edge. In 2023, the company acquired a majority stake in Anthropic, an AI safety and alignment research company. Additionally, Alphabet has partnered with various organizations to collaborate on AI research and development, solidifying its position in the AI landscape.
Alphabet's AI strategy addresses potential ethical concerns and regulatory challenges through initiatives such as establishing an AI ethics board and committing to transparency and accountability in its AI practices. These efforts demonstrate Alphabet's commitment to responsible AI development, which should contribute to its long-term growth and maintain investor confidence.
In conclusion, investing in cheap tech stocks like Apple and Alphabet offers a more reliable return on investment than speculative AI ventures. By focusing on income-generating tech stocks with stable profits and cash flows, investors can capitalize on undervaluations created by market perceptions and secure steady returns. As the tech sector continues to evolve, these two companies remain well-positioned to generate long-term growth and provide attractive investment opportunities.
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