2 Undervalued Tech Stocks Poised for Growth in AI and Electrification

As artificial intelligence (AI) and electrification reshape industries, investors are hunting for tech stocks with durable competitive advantages and catalysts to drive outsized returns. Among the overlooked gems, Marvell International (MRVL) and NICE (NICE) stand out. Both are trading at steep discounts to their fair values while riding secular trends in AI-driven networking and software solutions. Here's why these stocks could be among the best buys in 2025.

Marvell International (MRVL): The AI Semiconductor Powerhouse

Marvell is a leader in semiconductors for AI-driven networking and data centers. Its narrow economic moat stems from proprietary intellectual property (IP) and switching costs for customers reliant on its high-performance chips.

Why It's Undervalued

• Fair Value vs. Price: Morningstar values MRVL at $90 per share, a 28% premium to its June 12 closing price of $69.64. Analysts at Wall Street firms see even higher upside, with an average target of $96.03 (50% upside).
• Growth Catalysts:
• AI Chip Sales: MRVL's custom accelerators (e.g., Trainium2 for Amazon, Maia for Microsoft) are powering hyperscalers' AI infrastructure. Revenue from data centers surged 78% year-over-year in Q4 FY2025.
• Optical Leadership: Its optical chip solutions are critical for next-gen data centers, expected to account for over half of data center revenue by late 2025.

Risks & Mitigation

• Cyclicality: The storage and automotive markets remain volatile, but MRVL's focus on AI and networking—two of the fastest-growing segments—buffers this risk.
• Debt: While MRVL carries $4.06 billion in debt, its free cash flow is set to nearly double to $3 billion annually by 2030, easing leverage concerns.

NICE (NICE): AI-Driven Software for Compliance and Customer Engagement

NICE is a pioneer in AI-enhanced software for customer engagement, financial compliance, and workforce optimization. Its wide moat is built on sticky software solutions and high customer retention, with 90% of clients renewing contracts annually.

Why It's Undervalued

• Fair Value vs. Price: Analysts peg NICE's 12-month price target at $211.50, a 23% premium to its June 12 close of $171.44. The consensus rating is "Moderate Buy", with bulls targeting $300 on aggressive AI adoption.
• Growth Catalysts:
• AI Integration: NICE's software uses AI to analyze customer interactions, detect fraud, and optimize workflows. Q2 2025 EPS estimates hit $2.99, a 13% jump over 2024.
• Regulatory Tailwinds: Financial compliance demand is soaring post-pandemic, with NICE's solutions dominating banks and insurers.

Risks & Mitigation

• Valuation Concerns: Bears argue NICE's P/E of 23.66 is rich relative to peers. However, its 7% revenue growth and 100% historical earnings beat rate justify optimism.
• Competitor Pressure: SAP and Salesforce are expanding into compliance, but NICE's domain expertise and client loyalty offer a strong defense.

Investment Thesis: Buy Both for AI-Driven Growth

Both MRVL and NICE are strategically positioned in AI's $15+ trillion market opportunity. Their low uncertainty profiles—stable cash flows, recurring revenue models, and defensible moats—make them ideal for investors seeking resilience amid economic cycles.

• MRVL: A buy below $75, with a $90 fair value anchor. The June 17 AI webinar could be a catalyst for re-rating.
• NICE: A buy below $180, targeting $210+ by year-end. Its $713 million revenue beat in Q2 could fuel momentum.

Bottom Line

While risks like cyclicality and competition linger, the discounted valuations and compounding growth drivers make MRVL and NICE compelling buys. Investors should prioritize these names as AI and electrification reshape the tech landscape.

Data as of June 6, 2025. Always consider individual risk tolerance and diversification before investing.