Investing in tech stocks can be a complex task. This is especially true when identifying which companies have the most potential for considerable returns. In 2024, three companies were marked as highly undervalued yet fundamentally solid. These companies are thriving through strategic innovations and solid financial health. Understanding why these tech giants are undervalued and their potential is required to capitalize on emerging AI market trends.
To begin with, the first company is making headlines with its aggressive investments in AI tech. These are set to revolutionize user engagement across its platforms. Similarly, the second one continues to innovate with its AI-driven creative tools, maintaining impressive revenue growth and solid profitability. Meanwhile, despite a recent revenue dip, the third company is strategically positioned in the semiconductor industry to leverage growth opportunities.
These companies hold the characteristics of undervalued tech stocks, offering a unique blend of innovation, financial stability and market potential. Here, the focus is on their fundamentals, revealing why they are poised for remarkable growth in 2024.
Meta (META)
Meta (NASDAQ:META) leads in social media platforms and focuses on advancements in AI tech. The company’s AI advancements, like Llama 3, mark its focus on leading the AI space. Llama 3 includes models with 8 billion, 70 billion and an upcoming 400+ billion parameters, positioning Meta’s AI as best-in-class for its scale. Tens of millions of users have already tried Meta AI, with positive feedback indicating sharp user acceptance and engagement.
Moreover, AI-driven content recommendations have considerably impacted engagement on Meta’s platforms. For instance, 30% of Facebook feed posts and over 50% of Instagram content are now AI-recommended, indicating the edge of AI in enhancing user experience and engagement. Meta’s CapEx was $6.72 billion in Q1 2024, including principal payments on finance leases. Meta expects to increase its CapEx considerably due to its AI focus. It projects $35 to $40 billion for 2024, up from a previous range of $30 to $37 billion. Hence, this indicates Meta’s edge on the required infrastructure for its AI and technological initiatives.
Overall, Meta’s massive investments in AI infrastructure and massive growth potential make it a high mark on undervalued tech stocks.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) leads in creative software such as Photoshop, Illustrator and Creative Cloud suite. The company’s top-line for Q2 2024 was $5.31 billion, showcasing 11% annual growth. This growth indicates the company’s solid business model and sharp market strategies. Revenue growth reflects the company’s ability to enhance its market share and improve its sales performance. Adobe’s EPS was $4.48, representing a 15% annual increase. That highlights Adobe’s solid bottom line and sharp cost management.
Further, the company’s Creative Cloud, Document Cloud and Experience Cloud have attracted diverse users, from individual creators to large enterprises. The integration of AI across these platforms is a game-changer. For instance, Adobe’s Firefly family of creative, generative AI models has derived over 9 billion images since its launch in March 2023. This points to the considerable impact of AI on creative processes. Such innovations enhance the functionality of Adobe’s products and derive higher user engagement and retention.
To sum up, Adobe’s integration of AI into its products, high user engagement and revenue growth solidify the company’s presence on the undervalued tech stocks list.
Amkor Technology (AMKR)
Amkor Technology (NASDAQ:AMKR) prevails in advanced packaging and semiconductor offerings, which are industry essentials. The company derived Q1 2024 revenue of $1.37 billion, a 7% year-on-year decline in the top line. Despite this decrease, the revenue aligned with expectations, signaling a stabilization after a challenging period. Meanwhile, the company’s EPS stood at 24 cents. It highlights the company’s ability to maintain profitability even during downturns. Amkor considered the first quarter to be the low point for revenue and utilization. The company is projecting sequential growth of 6% in Q2 2024, and the top line may hit $1.40 to $1.50 billion.
Moreover, this forecasted growth aligns with a broader industry recovery. With that, Amkor’s strategic positioning in advanced packaging and semiconductor services places it in a favorable position to capitalize on this upturn. However, improvements in the Android supply chain and NAND memory demand indicate a rebound. The overall projection for smartphone units to increase by low single digits this year, combined with the introduction of AI in edge devices, points to the demand for Amkor’s advanced packaging solutions.
To conclude, Amkor Technology’s strategic positioning and forecasted recovery highlight its potency among undervalued tech stocks.
As of this writing, Yiannis Zourmpanos held a long position in META. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.