Artificial intelligence has dominated the technology market in 2024, leading to significant gains for technology stocks. Rapid advancements in AI have been a catalyst for business value, which has been reflected in the stock performance of companies directly involved in this technology. Another major driver of outperformance has been the crypto sector. The launch of Bitcoin spot exchange traded funds in January 2024 marked the start of a big year for cryptocurrencies, which was further strengthened by Donald Trump’s election victory in November.
However, on January 13, CNBC reported that major tech stocks were facing pressure as the specter of higher inflation pushed Treasury yields higher and dampened expectations of a possible Federal Reserve rate cut this year. Higher yields increase the cost of capital and can reduce both consumer spending and business investment. The sell-off in tech stocks extended beyond mega-cap tech giants, with quantum computing stocks seeing significant declines. The broader market was also hit, with the S&P 500 and Nasdaq Composite each falling more than 1%, following a hotter-than-expected jobs report and rising earnings expectations. inflation among consumers.
In an interview with CNBC on January 13, Daniel Ives, global head of technology research at Wedbush Securities, discussed the current state and future prospects of the technology sector, especially in the context of rising interest rates and a strong dollar. Ives pointed out that the tech bull market is only halfway there. He argued that strong consumer demand and capital expenditures (CapEx) in artificial intelligence (AI) are driving growth in the sector, creating investment opportunities in technology stocks during market declines. Ives believes that the fundamental strength of technology companies, particularly in the area of AI, will continue to drive positive performance and suggests a diversified approach to investing in technology. Ives also discussed broader market dynamics, including the possibility that the Federal Reserve remains hawkish at its next meeting. He sees the current environment as an opportunity to capture the winners in the technology sector.
The technology sector continues to offer attractive opportunities for investors seeking long-term value and growth. As the market fluctuates, undervalued stocks are an essential strategy for maximizing returns.
Why is Micron Technology, Inc. (MU) the Most Undervalued Tech Stock to Buy According to Hedge Funds?
Close-up view of a computer motherboard with integrated semiconductor chips.
To compile our list of the top 10 undervalued tech stocks to buy according to hedge funds, we used Finviz and Yahoo stock filters to find the 40 largest tech companies trading below the forward price-to-earnings ratio of January 15 to 13. Insider Monkey’s hedge fund database ranks 10 stocks based on the most hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Number of hedge fund investors: 107
Forward P/E ratio as of January 13: 13.26
Micron Technology, Inc. (NASDAQ: MU) is a global leader in memory and storage solutions, including DRAM, NAND, NOR flash memory and solid state drives. The Company provides products to customers in the data center, PC, graphics, networking and automotive markets.
Micron Technology, Inc. (NASDAQ: MU) is pioneering the development of high-bandwidth memory (HBM) and low-power DDR5X (LPDDR5X) solutions, which are essential for advanced computing applications and data centers. The company is investing in expanding its HBM capacity facilities, with the aim of achieving natural bit share in the second half of 2025. This includes investments in front-end manufacturing plants, assembly, testing and cleanroom capabilities. Micron Technology, Inc.’s (NASDAQ: MU) HBM3E and HBM 12-high products are in high demand.
Additionally, Micron Technology (NASDAQ:MU) is expanding its facilities with a new investment in India, to support its back-end operations. These investments are crucial to maintaining the company’s leadership in advanced memory technologies and ensuring it can meet growing demand from data centers, AI and other high-growth segments.
global UM ranks 1st on our list of top undervalued tech stocks to buy according to hedge funds. While we recognize the potential of MU as an investment, our conviction lies in the belief that AI stocks have more promise in terms of higher returns and in a shorter time frame. If you’re looking for an AI stock that’s more promising than MU but is trading at less than 5x earnings, check out our report on cheapest AI stock.
