Just like that, and tech stocks are back in favour again. As new investors get hyped on the artificial intelligence (AI) boom, valuations on select innovators could start to swell. But before chasing the hottest names that are back on the uptrend, I’d encourage investors to insist on value and the tech names that have reliable growth theses in addition to relatively large margins of safety. Indeed, it’s easy to overestimate how much a stock ought to be worth.
That’s why a large margin of safety can save you in case your estimate of intrinsic value is a few notches too high, perhaps due to an overly optimistic assumption or failure to factor in risk.
In any case, the bargain bin may be less full than it was just a few weeks ago. But there’s still plenty for those of us who are showing up a bit late. In this piece, we’ll check in on two tech plays that still look modestly priced following their respectable quarterly earnings results.
At the end of the day, earnings reports should do the talking, not speculation about tariffs and other macro headwinds that may never come to be. Without further ado, here are two tech names to watch after their applause-worthy quarterly showings.
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Advanced Micro Devices
First up, we have Advanced Micro Devices (NASDAQ: AMD), which is experiencing a bit of a comeback after crashing and shedding 63% of its value from peak to trough. Indeed, the graphics processing unit maker and AI chip stock may carry a great deal of U.S.-China trade risk. But with both nations reducing their tariffs, I think names like AMD stand to get a really heavy weight lifted off their shoulders.
With a $10 billion partnership recently inked with a Saudi Arabian investment partnership, I think it’s time to give the AI chip “runner-up” the benefit of the doubt as it attempts to stage another comeback.
Only time will tell if China worries return, but I’d argue that most such jitters have already been well baked into the stock. Perhaps AMD stock is the name to buy and hold if you’re optimistic about the fate of U.S.-China trade from here. The de-escalation in the tariff war may very well just be beginning.
Alphabet
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is another tech stock that’s worth venturing into the U.S. markets while the greenback is in a bit of a slump. The stock trades at 17.7 times forward price to earnings (P/E), which seems to discount the power of its AI offering.
The company is in the process of testing out Gemini on its search homepage, which, I believe, could be a big deal as the $2 trillion behemoth looks to keep up with all the AI competition. And as Gemini AI becomes useful for targeting ads on YouTube, perhaps it’s Google’s AI monetization game plan that is worth getting behind as investors await the payouts from prior capex.
With a potential AI agent rumoured for its annual I/O event, I’m inclined to view GOOG stock as severely undervalued with timely catalysts that could allow the stock to come roaring back.
