Three Budget-Friendly Tech Shares Worth Investing in Immediately
With the S&P 500 seeing a 20% increase in both 2023 and 2024, you might think that all stocks would follow suit. Not so fast! Only about 30% of all stocks managed to beat the index during those years, setting a record-low percentage for the past 30 years. This opens up a chance for cheaper stocks to catch up to their high-performing counterparts, and these include AI darlings like Dell Technologies, ASML Holdings, and ON Semiconductor.
1. Dell Technologies (DELL)
Despite Dell Technologies' impressive 50.6% growth in 2024, it's still a steal at 19 times trailing earnings and 12 times forward earnings estimates. As a leader in enterprise servers, Dell has a lot of room to grow, especially as AI-powered servers gain popularity. The company's data center segment now makes up around 70% of its total profits, and with PCs set to see a refresh due to new innovations and Windows 10's end-of-support, Dell looks poised for a comeback.
2. ASML Holdings (ASML)
Though ASML isn't the cheapest stock out there at over 40 times earnings and 32 times 2025 earnings estimates, its valuation is actually below average for the company, given its history. ASML has a monopoly on extreme ultraviolet lithography technology, which is crucial for manufacturing leading-edge semiconductors. Shares took a hit due to recent fears about DUV machine sales to China, but ASML's EUV machines are higher-revenue and higher-margin, and should see massive demand as AI chip growth continues.
3. ON Semiconductor (ON)
The PC market isn't the only chip market in a downturn, as industrial and auto chips are also struggling. However, with this downturn approaching the two-year mark, now could be the perfect time to invest in high-quality companies like ON Semiconductor. ON has transformed itself under new leadership, shedding manufacturing fabs and low-margin consumer businesses, while focusing on next-generation power and analog semiconductors. Power and analog chips are expected to see long-term growth thanks to the electrification of vehicles and infrastructure, and ON's strong financials and share repurchases make it an attractive investment.
Of course, as with any investment, it's important to do your due diligence and consider your risk tolerance. But with these three stocks looking cheaper than they probably should, it might be time to take a closer look.
- Given the lower-than-average valuation of Dell Technologies, despite its strong performance in 2024, investing in this AI darling could prove to be a wise financial decision, as its leadership in enterprise servers and significant growth in the data center segment offer promising opportunities.
- ASML Holdings' valuation might seem high, but considering its monopoly on extreme ultraviolet lithography technology and the increasing demand for leading-edge semiconductors in the AI chip market, investing in this finance-heavy company could yield significant returns in the long run.
