The stocks listed here have competitive advantages that make them among the best tech companies to invest in.
They are cheap-looking stocks when compared to the tech sector as a whole.
10 stocks we like better than ASML ›
The valuations of many artificial intelligence (AI) stocks have gotten out of hand. As great a stock as Nvidia is, I don’t think it’s worth paying more than 50 times earnings just to own shares, not when competition is on the rise and tech giants are building more of their own chips. Another example is Palantir Technologies and its absurd $420 billion valuation; the company is barely on track to even generate 1% of that in annual revenue. With these types of valuations, I wouldn’t blame investors who continue to sit on the sidelines when it comes to AI.
On the other hand, there are some stocks out there that I think are truly underrated buys. These are the only three AI stocks that I’d consider buying today, as they possess some fantastic fundamentals and are much more reasonably priced: ASML (NASDAQ: ASML), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL).
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One of the most important companies in the tech world is ASML. The company’s photolithography machines are cutting-edge technologies, and ASML dominates the market for extreme ultraviolet photolithography machines, which are needed for the production of advanced semiconductor chips. This effective monopoly gives the company a strong competitive advantage and enables it to generate fantastic profit margins of around 29%.
ASML is a Dutch-based company, and tariff-related concerns might be keeping it from getting as much investor fanfare and excitement as domestic tech companies get, which is why its valuation still seems relatively modest. Its price-to-earnings multiple is 36, which is lower than the Technology Select Sector SPDR average of 42.
Share prices of ASML have risen nearly 54% in the past year, but I believe there’s still much more upside in the long run. With ASML…
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