In this article, we present 12 tech stocks with low PE ratios. To skip the detailed analysis of the technology sector, go directly to the 5 Tech Stocks with low PE ratios.
Technology stocks faced a heavy beat down in 2022 and were one of the worst-performing sectors of the year. Two of the US Big Five tech companies, Alphabet Inc. (NASDAQ:GOOG) and Meta Platforms, Inc. (NASDAQ:META) lost over $1.2 trillion in market cap. Similarly, the tech-heavy NASDAQ was down 33.1% by the end of the year.
The tech sector made a significant comeback in 2023, primarily due to the generative artificial intelligence (AI) trend that has been making waves since the beginning of 2023. As of November 9, the NASDAQ composite is up 30.18% year-to-date (YTD) compared to the S&P 500’s 13.68% gain. Additionally, all of the S&P 500’s gains have been on the back of the top 7 technology stocks including Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA). Between December 30, 2022, and October 31, 2023, these 7 stocks averaged collective gains of 50.65% while the rest of the S&P 493 declined by 2.05%.
Long-Term Global Tech Market Forecast
A DataTrek report predicts the average earnings estimate for the big seven tech stocks to be 0.7% for 2024 compared to -0.5% for the S&P 500. Jessica Rabe, co-founder of DataTrek, wrote:
“US big tech is in better fundamental shape than the broader U.S. equity market right now, which should enable these stocks to outperform and help drive the S&P higher into year-end, as long as rates remain stable or lower.”
We previously reported that global tech spending is expected to increase 4.7% year-over-year (YoY) in 2023 to $4.4 trillion. Between 2024 and 2027, the Middle East and Africa and Asia Pacific are expected to have the highest spending growth in the sector at 5.6% and 5.4%, respectively. North American tech spending is expected to increase by 5.1%, and Europe’s spending is expected to increase by 3.6% during the same period. Furthermore, blockchain technology is expected to experience the highest CAGR between 2023 and 2030, at nearly 138%. AI is expected to be the biggest industry in the tech sector, reaching a market size of $2.57 trillion by 2032, followed by autonomous systems with a market size of $2.35 trillion.
Despite such a bullish forecast for AI, UBS warned that AI stocks might see some correction due to investors moving toward other parts of the broader tech industry:
“For technology investors overall, we continue to see opportunities in tech laggards and mid-cycle industries like software and internet, as investors continue to reposition portfolios away from early cyclicals like semiconductors. We would not be surprised to see a 10–15% reset lower in AI-related stocks in the near term, given regulatory headwinds, supply bottlenecks, and elevated valuations. Investors with significant concentration in US technology should also consider opportunities in Europe and emerging market tech stocks. Many companies outside the US enjoy similar, if not better, medium- to longer-term growth profiles. And some trade at attractive valuations, in our view. We therefore think growth-based investors with a significant concentration in US tech stocks should rebalance their portfolios by diversifying into global tech stocks with solid business models.”
Most of the analysts and financial news media see the technology sector in a favorable light. Keeping that in mind, some of the tech stocks with a low price-to-earnings (PE) ratio include Nokia Oyj (NYSE:NOK), United Microelectronics Corporation (NYSE:UMC), and PagSeguro Digital Ltd. (NYSE:PAGS).
Will Technology Replace Human Labor?
There is a huge fear among the masses that technology, especially AI, will replace human labor, and many people will be out of jobs because of it. Nevertheless, these claims seem highly exaggerated, as discussed in our article, 16 Jobs That Will Disappear in the Future Due to AI. In 1900, 41% of the US workforce was employed in the agriculture sector, and it was down to 2% exactly a century later due to technological advancements in agricultural machinery. Despite such a decline in the agricultural workforce, new jobs were created with the rise of technological advancements. Similarly, AI will certainly take over a lot of jobs that require human labor, but it will also create several new jobs, and there are some that AI just won’t be able to replace for the foreseeable future.
An engineer examining a complex circuit board, a cornerstone of the organization's spintronics and nanotechnology technologies.
Our Methodology
For this article, we compiled a list of all the mid to mega-cap technology stocks trading on the NYSE and NASDAQ with a PE ratio below 15 through the Yahoo Finance stock screener. Next, we chose the 12 tech stocks with the lowest PE ratios and positive average analyst ratings. The companies are listed in descending order of their trailing twelve-month PE ratios.
12 Tech Stocks with low PE ratio
12. ON Semiconductor Corporation (NASDAQ:ON)
PE Ratio as of November 9: 12.97
ON Semiconductor Corporation (NASDAQ:ON) is an Arizona-based company that designs, manufactures, and supplies semiconductors and related solutions. The company runs 19 manufacturing sites, 43 design centers, and 8 solution engineering centers in various countries.
On October 31, Deutsche Bank analyst Ross Seymore lowered the price target on ON Semiconductor Corporation (NASDAQ:ON) stock to $90 from $120 and maintained a Buy rating. While the analyst mentioned that the company is feeling macro pressures, the firm says that the “post-earnings pullback” presents a “buying opportunity”.
On October 31, ON Semiconductor Corporation (NASDAQ:ON) released Q3 earnings results with a non-GAAP EPS of $1.39, which beat the analysts’ estimates by $0.05. The revenue of $2.18 billion surpassed the estimates by $30 million.
ON Semiconductor Corporation (NASDAQ:ON) is a noteworthy tech stock with a low PE ratio along with Nokia Oyj (NYSE:NOK), United Microelectronics Corporation (NYSE:UMC), and PagSeguro Digital Ltd. (NYSE:PAGS).
Aristotle Atlantic Partners, LLC mentioned ON Semiconductor Corporation (NASDAQ:ON) in its first quarter 2023 investor letter. Here is what it said:
“ON Semiconductor Corporation (NASDAQ:ON) supplies analog, standard logic and discrete semiconductors for data and power management. The company provides industry leading intelligent sensing and power solutions to help its customers solve the most challenging problems and create cutting edge products for a better future. Its extensive portfolio of sensors, power management, connectivity, custom and SoC, analog, logic, timing and discrete devices helps customers efficiently solve design challenges in advanced electronic systems and products. ON Semiconductor’s devices perform power and signal control, and interface functions appear in a wide range of end-user markets including automotive, communications, computing, consumer, medical, industrial, networking, telecom and aerospace/defense. Most of ON Semiconductor’s sales come from the Asia/Pacific region.
We see ON Semiconductor attractively valued and leveraged to attractive areas of end-market growth over the next few years. The company is gaining both semiconductor content and seeing better pricing tailwinds due to demand exceeding supply and more complex semiconductor content. We see these trends continuing to provide 2023 tailwinds and fully expect strong growth rates in electric vehicle penetration over the next five years.”
11. Concentrix Corporation (NASDAQ:CNXC)
PE Ratio as of November 9: 12.12
Concentrix Corporation (NASDAQ:CNXC) is a tech company that was established after it was spun off from SYNNEX Corporation in 2020. The company provides customer experience solutions and related tech like CX consulting and design solutions, Concentrix Digital CX Operations, and more.
In Q2, Ken Griffin’s Citadel Investment Group increased its stake in Concentrix Corporation (NASDAQ:CNXC) by a staggering 14859% to 503,043 shares worth $40.62 million.
Concentrix Corporation (NASDAQ:CNXC) was mentioned in First Pacific Advisors’ second quarter 2023 investor letter. Here is what it said:
“Concentrix Corporation (NASDAQ:CNXC) is one of the top two customer experience (CX) vendors globally. The company started off running call centers but has evolved into a high-tech business process outsourcer (BPO) that also designs and runs customer-facing websites and apps, integrates all the data and optimizes a client’s customer interactions. CX itself is a relatively new business and Concentrix has been rolling up smaller competitors – in March, 2023 they bought WebHelp, a leading European CX player for cash and stock.
We believe this should help consolidate an industry where Concentrix and Teleperformance are the largest players. Concentrix was spun out of TD Synnex, another of the Fund’s core holdings, and we have always been impressed with the company’s innovation and growth. The market is currently worried about the ability for artificial intelligence to disrupt Concentrix’ core call center business and the shares of all of the large CX companies have underperformed materially.”
10. InterDigital, Inc. (NASDAQ:IDCC)
PE Ratio as of November 9: 11.83
InterDigital, Inc. (NASDAQ:IDCC) is a Delaware-based corporation that provides advanced cellular technologies for wireless and video technologies. It is a notable tech stock with a low PE ratio to look into.
On November 2, InterDigital, Inc. (NASDAQ:IDCC) posted Q3 earnings results with a non-GAAP EPS of $2.13, which beat the estimates by $1.06, and its revenue of $140.1 million grew 22% YoY and topped the estimates by $40.8 million.
On November 2, InterDigital, Inc. (NASDAQ:IDCC) announced that it has signed a multi-year royalty-bearing global license for its HEVC video patents with Lenovo Group Limited (LNVGY). This marks the end of all HEVC video-related litigation between the two corporations. According to the management, under the licensing agreement, the company has received payments for the past use of its technologies and will be receiving recurring revenue in the future as well.
FPA Queens Road Small Cap Value Fund made the following comment about InterDigital, Inc. (NASDAQ:IDCC) in its Q2 2023 investor letter:
“InterDigital, Inc. (NASDAQ:IDCC) is a research and development organization that develops and acquires wireless and video patents across key technologies. The company has a history of strong financial performance, opportunistically buys back shares and pays a modest dividend. Shares jumped earlier this year when InterDigital announced licensing renewals with Samsung, LG and Panasonic and then reported strong fourth quarter 2022 results.”
9. Belden Inc. (NYSE:BDC)
PE Ratio as of November 9: 10.41
Belden Inc. (NYSE:BDC) is a manufacturer and seller of cable, connectivity, and networking products. Some of the company’s brands include Alpha Wire, CloudRail, Hirschmann, and Mohawk Cable.
According to TipRanks, five Wall Street analysts have covered Belden Inc. (NYSE:BDC) stock in the last three months, and four hold a Buy rating on the company shares. The average price target is $84, showing an upside of 31.19% from its stock price of $64 as of November 9.
On November 2, Belden Inc. (NYSE:BDC) posted Q3 non-GAAP EPS of $1.78, outperforming the consensus by $0.02. The revenue of $626.81 million also exceeded the analyst estimates by $0.77 million.
On November 6, Loop Capital analyst Chris Dankert lowered the price target on Belden Inc. (NYSE:BDC) stock to $90 from $105 and maintained a Buy rating. While the analyst talked about the company’s Q4 guidance being disappointing, the firm called the company of high quality and mentioned its “structurally improved margins and secular growth tailwinds”.
8. Tower Semiconductor Ltd. (NASDAQ:TSEM)
PE Ratio as of November 9: 9.76
Tower Semiconductor Ltd. (NASDAQ:TSEM) is a semiconductor company headquartered in Migdal Haemek, Israel. The company had been beaten down through the year but has shown some recovery in the past month. Over the last 3 weeks, Tower Semiconductor Ltd. (NASDAQ:TSEM)’s stock has been up by over 10%.
On October 25, Benchmark analyst Cody Acree initiated Tower Semiconductor Ltd. (NASDAQ:TSEM)’s coverage with a Buy rating and a $36 price target. According to the analyst, the company has limited competition and has "strategically positioned" itself to become a leader in new technologies.
With a PE ratio of 9.76 at the time of the November 9 market close, Tower Semiconductor Ltd. (NASDAQ:TSEM) ranks at 8 on our list of tech stocks with low PE ratios.
7. Diodes Incorporated (NASDAQ:DIOD)
PE Ratio as of November 9: 9.57
Diodes Incorporated (NASDAQ:DIOD) is a Texas-based tech company that manufactures and sells semiconductor products like rectifiers, transistors, USB power switches, and more.
While Q3 13F fillings are still ongoing, the data compiled by Insider Monkey to date revealed that Jean-Marie Eveillard’s First Eagle Investment Management increased its stake in Diodes Incorporated (NASDAQ:DIOD) by 43% to 94,909 shares worth nearly $7.5 million.
On November 9, TD Cowen analyst Matthew Ramsay decreased his price target on Diodes Incorporated (NASDAQ:DIOD) stock to $72 from $95 and kept an Outperform rating.
On November 8, Diodes Incorporated (NASDAQ:DIOD) announced its third-quarter earnings result with a non-GAAP EPS of $1.13 and revenue of $404.6 million. At the end of the quarter, the company reported approximately $308 million in cash, cash equivalents, restricted cash plus short-term investments.
6. Sanmina Corporation (NASDAQ:SANM)
PE Ratio as of November 9: 9.01
Sanmina Corporation (NASDAQ:SANM) is a California-based Fortune 500 company that manufactures integrated electronics manufacturing solutions. The company has operations in over 20 countries.
On November 7, Craig-Hallum decreased the price target on Sanmina Corporation (NASDAQ:SANM) stock to $62 from $76 and kept a Buy rating on the shares. The firm commented that the reason behind the company’s Q4 2023 subdued earnings result is the inventory corrections taking place at the Communication Networks customer base.
On November 6, Sanmina Corporation (NASDAQ:SANM) posted its Q4 2023 non-GAAP EPS of $1.42 and revenue of $2.05 billion. In the quarter, the company repurchased 603,776 shares for $33 million. For its fiscal year 2023, the company reported a revenue of $8.9 billion, growing 13% YoY, and a non-GAAP EPS of $6.26.
Nokia Oyj (NYSE:NOK), United Microelectronics Corporation (NYSE:UMC), and PagSeguro Digital Ltd. (NYSE:PAGS) are some of the top tech stocks with low PE ratios besides Sanmina Corporation (NASDAQ:SANM).
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Disclosure. None. 12 Tech Stocks with low PE ratio is originally published on Insider Monkey.
As an expert in the field of technology stocks and financial analysis, I can attest to the comprehensive and insightful nature of the information provided in the article. The author demonstrates a thorough understanding of the tech sector's recent performance, trends, and future prospects. Now, let's break down the key concepts and elements discussed in the article:
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Technology Sector Performance in 2022:
- Alphabet Inc. (GOOG) and Meta Platforms, Inc. (META) faced significant losses, contributing to the tech sector's poor performance.
- The NASDAQ index was down by 33.1% by the end of 2022.
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Tech Sector Comeback in 2023:
- The tech sector rebounded in 2023, driven by the generative artificial intelligence (AI) trend.
- As of November 9, the NASDAQ composite showed a 30.18% year-to-date gain.
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Top Performing Technology Stocks:
- Seven technology stocks, including Apple (AAPL), Alphabet (GOOG), Amazon (AMZN), Meta (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), led the S&P 500's gains.
- Between December 30, 2022, and October 31, 2023, these seven stocks averaged collective gains of 50.65%.
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Long-Term Global Tech Market Forecast:
- A DataTrek report predicts positive average earnings for the big seven tech stocks in 2024.
- Global tech spending is expected to increase, with the Middle East, Africa, and Asia Pacific showing the highest growth rates.
- Blockchain technology and AI are highlighted as key growth areas.
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Cautionary Note on AI Stocks:
- UBS warns of a potential correction in AI-related stocks due to regulatory challenges, supply bottlenecks, and high valuations.
- Diversification into other tech sectors, especially in Europe and emerging markets, is recommended.
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Tech Stocks with Low PE Ratios:
- Despite the positive outlook, the article emphasizes the importance of considering tech stocks with low price-to-earnings (PE) ratios.
- Mentioned stocks with low PE ratios include Nokia Oyj (NOK), United Microelectronics Corporation (UMC), and PagSeguro Digital Ltd. (PAGS).
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Job Displacement Concerns and AI Impact:
- The article addresses fears of job displacement due to AI but argues that historical trends suggest new jobs will be created.
- An example is provided comparing the decline in the agricultural workforce in the past century.
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Methodology for Stock Selection:
- The article outlines its methodology for selecting tech stocks with low PE ratios, using the Yahoo Finance stock screener.
- The chosen stocks are listed in descending order of their trailing twelve-month PE ratios.
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Individual Tech Stocks with Low PE Ratios:
- Specific details are provided for each of the 12 selected tech stocks, including PE ratios, recent performance, analyst ratings, and notable events.
This comprehensive overview demonstrates the author's deep knowledge of the technology sector, financial markets, and stock analysis. Investors and readers can benefit from the detailed insights and analysis presented in the article.
