The best technology stocks rarely come cheap in bull markets. But despite the broader market hovering near its all-time high, a handful of high-quality companies’ stocks have stumbled, for reasons ranging from regulatory scrutiny to geopolitical fears. What do they all have in common? These companies dominate their respective industries.
That doesn’t guarantee their future success, but with some great stocks, the only times you’ll have a shot at buying in on the cheap will come when short-term adversity strikes.
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Below are three top-notch technology stocks currently in the bargain bin because they carry some extra baggage. All three companies are positioned for long-term growth that more than justifies their current valuations. Consider buying them while they’re down because they probably won’t stay so cheap once the storm clouds clear away.
Since the company lost an antitrust lawsuit in early August, there’s been a lot of noise around internet search giant Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). Regulators are pushing for a forced sale of its Google Chrome web browser and for rules against deals that protect its video platform YouTube and artificial intelligence (AI) app Gemini from competition.
Alphabet makes most of its money from digital ads it displays with Google Search results and in videos on YouTube, so the thought that competitive pressure might rise on its ad business has kept the stock down. Alphabet now trades at a forward P/E of just 20 times expected earnings, a bargain for a company that analysts estimate will grow its earnings by an average of 17% to 18% over the next three to five years.
Changes are coming to Alphabet, but investors might be overreacting. Chrome’s value in a sale has been estimated to be as high as $20 billion, which would be a nice influx of cash for Alphabet. And the proposed restrictions might reduce the tilt of the playing field, but Google could stay a big winner anyway. Meanwhile, Alphabet’s cloud business is becoming an increasingly important part of the company. Investors may look back at this period of uncertainty about Alphabet’s future as a buying opportunity.
The United States and China are locked in an AI battle that has put ASML Holding (NASDAQ: ASML) in a precarious position. The Dutch company is the world’s only manufacturer of the extreme ultraviolet lithography (EUV) machines capable of producing the types of high-end chips that AI applications require. The U.S. is pressuring ASML, the Netherlands, and the European Union to block sales of those machines to China, which has been an important market for ASML.
