Technology stocks continue to take it on the chin. The Nasdaq composite that is loaded with technology stocks is down nearly 30% this year, more than any other U.S. index, and deep in a bear market, defined as a decline of 20% from recent highs.
While it remains to be seen if this year’s market downturn comes out as bad as the dot-com era, there’s no question that there are some undervalued tech stocks in the market these days, with declines broad-based and seemingly no stock spared from the carnage.
The drop in share prices has made many of the best tech stocks more affordable. Retail investors who are willing to ride out the pain can find some super bargains as many top-notch tech stocks are depressed right now. Here are seven seriously undervalued tech stocks to buy now.
|PYPL||PayPal Holdings, Inc.||$82.75|
|CRWD||CrowdStrike Holdings, Inc.||$189.00|
|MRVL||Marvell Technology, Inc.||$54.57|
Undervalued Tech Stocks: PayPal (PYPL)
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Financial technology stocks such as PayPal (NASDAQ:PYPL) have been getting clobbered from all sides this year. Fintech names have gotten lumped in with cryptocurrencies and dragged lower as a result. They’re also associated with the controversial buy now, pay later sector that is being accused of predatory lending and drawing scrutiny from lawmakers in Congress, and they have been caught in the vortex of investors fleeing high growth, unprofitable tech stocks in favor of more established blue-chip names.
Consequently, PYPL stock has taken a drubbing over the past seven months and is down 56% on the year. The sharp decline, while hard to watch, presents a great buying opportunity for investors who can afford to hold the stock through the current carnage and emerge stronger on the other side.
In PayPal, investors get a company that has more than 85 million active users, is forecasting 50% revenue growth for its Venmo payments app, and is the market leader in the buy now, pay later space that is popular with younger consumers.
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Social media company Pinterest (NYSE:PINS) has been beaten down more than most stocks this year, having fallen 70% over the past 12 months as the company struggles to retain users coming out of the global pandemic. However, it now appears that a white knight in the form of Elliott Management is riding to the rescue of the social media platform that enables people to share photos, videos, and images.
News recently broke that Elliott Management, led by billionaire hedge fund manger Paul Singer, has taken a 9% stake in Pinterest, become the company’s largest shareholder, and is looking to turnaround the struggling social media company. Elliott Management’s involvement comes after Pinterest co-founder Ben Silbermann resigned as the company’s chief executive officer in June.
A depressed share price and a turnaround story. What’s not to like?
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Trading 41% lower than where it was last November, shares of cybersecurity firm CrowdStrike (NASDAQ:CRWD) look like a steal now. The Austin, Texas-based company continues to be at the forefront of online security for both consumers and businesses and has drawn a lot of media attention as cyberattacks around the world have intensified since Russia invaded Ukraine at the end of February this year. The 29 analysts who cover CrowdStrike have a median price target on the stock of $225, implying 25% upside over the next year.
Despite the challenges this year has brought, CrowdStrike has continued to perform admirably. In its fiscal first quarter ended April 30, the company reported that its revenue grew an impressive 61% year over year. The company also raised its full year revenue and profit guidance, suggesting that it remains resilient in the face of higher interest rates and a slowing economy. CrowdStrike now has 16,325 cybersecurity customers, most of them corporations, which is an increase of 65% over the past year.
Undervalued Tech Stocks: Netflix (NFLX)
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Among the mega-cap tech stocks, Netflix (NASDAQ:NFLX) is the most bruised. The original streaming service’s share price has declined 64% this year. It’s a big comedown for a company whose stock was sitting at $700 per share last fall.
The decline has been entirely due to the company reporting a loss of subscribers and difficulty attracting new customers. While streaming was all the rage during the pandemic as people sheltered at home, consumers are spending their time and money elsewhere now, including back at movie theaters.
Netflix has warned that it could lose millions more subscribers in coming quarters, which has spooked investors and analysts who cover the company. However, the company does have a plan to turnaround its fortunes by launching a cheaper streaming tier that is supported by advertisements. To that end, Netflix just announced that it is partnering with Microsoft (NASDAQ:MSFT) on the ad-supported streaming tier, which it hopes to have up ad running by year’s end. Some analysts say ads are the key to Netflix’s future success.
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The Silicon Valley-based software company known for products such as Photoshop, Illustrator, Reader and the Portable Document Format (PDF) has not been immune to the market downturn. Year to date, Adobe (NASDAQ:ADBE) stock is down 28%. The stock is nearly 50% below its 52-week high. The weakness is the result of concerns that the company’s software-as-a-service business model will slow along with the economy and that businesses might put off orders for Adobe products should the economy fall into recession, as is widely expected.
But Adobe has shown itself to be holding its own in a tough operating environment. The company said recently that it remains on track to report nearly $18 billion of sales this year, which would be up from $15.8 billion of sales in 2021 and $12.9 billion in 2020, though admittedly it is lower than the projections Wall Street had penciled in. Plus, Adobe has more than $5 billion in cash on hand, which is a tidy sum that should help carry the company through any economic storm.
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Philadelphia-based Comcast (NASDAQ:CMCSA) is a telecommunications monster. The company is the second-largest cable television company in the world by revenue, as well as the biggest pay TV company, the largest cable TV provider, and the biggest home Internet service provider in America. Comcast owns and operates Universal Pictures, the NBC television network, Peacock streaming platform, and specialty channels such as CNBC, Oxygen and Bravo. And, Comcast is a leader in the rollout of fifth generation (5G) wireless internet.
Comcast now controls 67% of the broadband internet in the markets that it serves, ahead of all competitors. And the company is spending heavily to expand its 5G coverage and attract new customers, adding 1.2 million new wireless accounts last year. Yet for all the success, CMCSA stock is down 16% on the year. The stock is 26% lower than where it was 12 months ago. Investors should take advantage of the discount. The median price target on Comcast stock is $51, suggesting 25% growth from current levels.
Undervalued Tech Stocks: Marvell Technology (MRVL)
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Like all semiconductor and microchip stocks, shares of Marvell Technology (NASDAQ:MRVL) have been knocked down this year on fears of slowing demand and supply chain bottlenecks. In the last seven months, MRVL stock has fallen 38%. Marvell is not alone in its decline, with shares of all chip stocks sharply lower year to date. However, Marvell should be more insulated from a recession than its competitors given that only 12% of its annual revenue comes from consumer electronics.
Today, most of Marvell Technology’s sales are derived from data centers, 5G mobile networks, and the global automotive sector. The company’s chips and semiconductors are also widely used in cloud computing and artificial intelligence (AI). Specifically, Marvell is a key provider of data processing units (DPUs) that facilitate the movement of large amounts of digital data. This specialty should help to protect Marvell somewhat from any recession we experience.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.