I see ample value in some of the market’s more overlooked tech stocks. Indeed, the artificial intelligence (AI) boom has caused market participants to be a tad overexuberant, perhaps so much so that they’re willing to overextend a bit to get just a few shares of a hot, high-flyer. Undoubtedly, I can’t blame you if you gave in and bought shares of Nvidia (NASDAQ:NVDA) after its latest quarter of historic growth. The numbers really were beyond incredible.
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However, if you’re not the type of investor to crumble under the pressure of the market’s hottest AI stocks, perhaps it’s best to consider stocks like SONY, MU, or TSM. Each company still stands to gain from the adoption of generative AI technologies but at a far lower price of admission. Therefore, let’s use TipRanks’ Comparison Tool to check in with the following Strong-Buy-rated tech plays that may have GARP (growth at a reasonable price) written all over them.
Sony (NYSE:SONY)
If you’re looking for great value in consumer electronics, Sony is a great value option to consider while it’s still down around 30% from its late-2021 high of $133 and change. Lately, the PlayStation business has been dragging its feet, with 8.2 million units of the PlayStation 5 (PS5) shipped in the latest quarter (December), falling short of analyst expectations.
Undoubtedly, the PS5 console is getting long in the tooth, but with no successor in near sight, questions linger as to where the gaming division is headed next. Despite the uncertainties, I remain bullish as the firm looks to go down the Pro route to break out of PS5’s midlife crisis.
With the PS5 Pro reportedly coming in time for the 2024 holiday season, the console may just get that midlife boost it needs. Only time will tell how many PS5 owners will be tempted to upgrade to a device that’s up to three times faster, especially as macro headwinds continue to weigh on consumer wallets. In any case, I see the console refresh as being a hot seller for gamers looking to jump ship from another console, most notably Xbox.
Undoubtedly, Microsoft (NASDAQ:MSFT) shocked the gaming world when it announced that it’s opening the floodgates for first-party titles to be released on PS5. Could you imagine playing Xbox exclusives like Sea of Thieves on a PlayStation console?
Until Sony gives the go-ahead to launch its titles on Xbox, my guess is that some number of Xbox owners may have plenty of reason to buy a PS5 Pro, especially if more Xbox games are headed to Sony’s flagship console. If PS5 Pro does end up topping estimates, perhaps Microsoft deserves a big thank you from Sony investors.
In any case, SONY stock looks dirt cheap at just 19.1 times trailing price-to-earnings.
What Is the Price Target of SONY Stock?
SONY stock is a Strong Buy, according to analysts, with three unanimous Buys assigned in the past three months. The average SONY stock price target of $107.50 implies 21.1% upside potential.
Micron (NASDAQ:MU)
Micron stock is slated to report its latest quarter at market close tomorrow. If earnings (and guidance) top estimates, the $103.8 billion memory kingpin may finally experience its breakout moment. Today, the stock sits not too far from its all-time high of $101.85.
As the AI boom continues, expect the hunger for memory to climb accordingly. And as Micron looks to raise DRAM (dynamic random access memory) prices, its shares could be on the cusp of a potentially sizeable upside move, so says Baird Equity Research, who is looking for pricing to increase in the ballpark of 35-40% this year. Given this, I find it hard to be anything but bullish on MU stock.
Just last week, Stifel’s Brian Chin stepped forward, hiking the stock to Buy from Hold alongside a new price target of $120 (up from $80). Mr. Chin is also a big fan of the company’s ability to boast higher average selling prices, given DRAM industry dynamics. He also sees generative AI fueling demand for high-bandwidth memory, which Chin sees as giving Micron “a seat at the table” in the AI scene. I couldn’t agree more. Micron’s in a very nice spot right now as it plays its part in the AI chip boom.
On the NAND (a type of flash memory) front, Micron may be able to increase prices as buyers look to stock up, perhaps ahead of an “edge AI” boom that could see the rise of AI-capable PCs running AI models locally rather than in the cloud.
What Is the Price Target of MU Stock?
Micron stock is a Strong Buy, according to analysts, with 25 Buys and one Hold assigned in the past three months. The average MU stock price target of $104.76 implies 10.5% upside potential.
Taiwan Semiconductor (NYSE:TSM)
With shares recently correcting off new all-time highs of around $158 per share, Taiwan Semiconductor looks like an attractive value play again, even with the geopolitical risks of being domiciled in Taiwan. Given the stock’s past-year performance, perhaps Warren Buffett was wrong to ditch TSM stock over geopolitical uncertainties.
In any case, I view the modest 26.9 times trailing price-to-earnings multiple as way too depressed, even if there’s a credible chance that China-Taiwan tensions rise in the future. With a front-row seat to the AI show and a modest entry point at $135 per share, I’m staying bullish on the stock.
I think we’ve reached a point where the upside from the AI boom vastly exceeds the potential risk of a Chinese invasion of Taiwan. The AI chip boom is happening now.JPMorgan (NYSE:JPM) reiterated its Buy rating on the name earlier this month, noting that AI-related sales could rise 25% by 2026. Undoubtedly, edge AI is bound to be a major contributing factor behind such a surge, the bank noted.
In any case, investors comfortable with geopolitical risks may reap considerable rewards as TSM receives more of an AI boost over the coming years.
What Is the Price Target of TSM Stock?
TSM stock is a Strong Buy, according to analysts, with six unanimous Buys assigned in the past three months. The average TSM stock price target of $144.33 implies 6.8% upside potential.
Conclusion
If you’re not a fan of the valuation of bid-up AI technology plays, you don’t have to place a bet. Instead, you can go bargain hunting in some of the other corners of the tech scene that may be less loved. Of the trio, analysts see the most upside from SONY stock (~21%) for the year ahead.
