Investors should avoid megacaps at all costs, as the tech market has yet to bottom out, but there are new stars powering new tech trends, from AI and gaming to semiconductors.
Tesla (NASDAQ:TSLA) is crashing. In the past 12 months, the stock has fallen nearly 30% of his. Elon Musk tried to explain the months-long plunge.
The tech market is currently in a sea of red, trailing Wall Street.
Shopify (NYSE:SHOP) has lost about 42% over the past year.
Coinbase (NASDAQ:COIN) has fallen nearly 70% over the same period.
Even Meta (NASDAQ:META) is down almost 20%.
It’s a time of contemplation, and investors should take a closer look at less visible corners of the tech world, where great things are done and valuations are still very low.
While mega-cap tech stocks have nothing but downsides, a few lesser-known stocks in AI, gaming, and semiconductors have all sorts of upsides.
#1 Chatbot GPT Pioneer BigBear.ai (NYSE:BBAI)
Chatbot GPT is the hottest AI buzzword right now, and all the software companies associated with it are riding these tailwinds. Chatbot GPT itself is privately owned, and in January, just two months after its launch, Chatbot GPT reached nearly 100 million monthly active users. This makes it the world’s fastest growing consumer application in history.
Microsoft is pouring billions into OpenAI’s ChatGPT, a fact that has investors starting to scramble for companies working on AI technology.
BigBear.ai is one of them, up over 300% year-to-date.
An emerging leader in AI analytics and cyber engineering solutions, BigBear is one of the most exciting stocks in the space, surpassing the crypto craze.
This newcomer is still in the red. He closed last year’s third-quarter earnings with a net loss of $16 million, though he has a growing earnings base projected for up to $170 million in 2022. But what investors are looking at is what comes next…
One of the key attractions for investors in the last few days and weeks has been BigBear’s $900 million contract With the U.S. Air Force announced in January.
Other stocks in the space riding the 2023 AI boom include SoundHound (NASDAQ:SOUN) and C3.ai (NYSE:AI), the latter up more than 100% so far this year.
#2 by Enthusiast Gaming (NASDAQ:EGLX) and #1 in the US for unique visitors this year
Online gaming is another trend taking over in 2023. This is quietly turning into a $50 billion subscription business, and Enthusiast stands out.
Traffic is everything in this fast-growing gaming segment, and Enthusiast has earned Comscore’s top ranking for Unique Visitor Traffic.
Enthusiast Gaming operates nearly 50 gaming-related websites, 700 YouTube channels, and an online network of game development studios, not to mention about 500 gaming influencers they manage on Twitch and Youtube. We own and manage our own esports teams for some of the biggest names in gaming, including Call of Duty, Madden NFL, Fortnite, Overwatch, Super Smash Bros., Rocket League, and Valorant.
In this segment, fans, fans, and more fans (i.e. traffic) are how you monetize your games in a single “game house.” Enthusiast has created this home with a massive base for advertising, subscriptions, ticketing, wide area e-commerce, in-app purchases, premium content, NFTs, the metaverse, and even cryptocurrencies.
And this new pure entrant is on track, as recently reconfirmed by RBC Capital Markets. “Buy” evaluation The target price is $3.50 CAD. This is a considerable benefit for companies currently trading at less than $1.
Enthusiast’s revenues for the third quarter of 2022 increased to $51.12 million from $37.06 million in the same period last year, and earnings also look solid.
#3 Himax Technologies (NASDAQ:HIMX), Chip Wars Outlier
Semiconductors are currently one of the best areas to invest in, but not all are equal. The chip wars are still in its infancy, with only a handful of countries controlling this vital industry.
Himax is Taiwan’s leading semiconductor company and could end up becoming a multi-bagger. He’s one of the most profitable small caps, and he’s smart. It trades at a bargain to earnings.In fact, as of mid-February, it was trading at PE multiples of 6X.
for high max ROCEMore 26% (earnings from capital used or profit before tax) compared to the average of 15% for the rest of the semiconductor industry. While it appears to be undervalued at the moment, it is likely that it has given shareholders over the last five years the ability to double its earnings by continuously reinvesting capital and increasing returns, while at the same time giving shareholders his 14th. This is because only 100% has been returned. So nobody pays attention. That makes Himax an undervalued outlier in a booming segment that is central to the global supply war.
computer chip Not only are they essential to everyday electronics, they are a critical input to data centers, automobiles, and critical infrastructure. In short, they are the new oil and their supply is a geopolitical and national security factor.
Produced by Taiwan, an American ally 90 and above The world’s most advanced semiconductor computer chip, Himax is a very strong outlier in a field that has been difficult to navigate.
So, will 2023 bring relief to battered tech stocks? JPMorgan strategists say that after high inflation and rising interest rates made value stocks the market’s darlings last year, the pace of tightening is likely to pick up in 2023. Investors may return to growth stocks again. His two subsectors of technology that are currently receiving a lot of attention are: chip producer and video game maker.
For example AMSL (NASDAQ: ASML) A high-tech semiconductor manufacturing equipment manufacturer based in the Netherlands. ASML’s machines help the world’s largest chip makers continue to produce smaller and better chips, a process that has been improving since the 1960s. As noted above, companies with global competitive advantages in the chip industry are not only investors’ darlings, but also targets of national interest. His ASML is no exception here. It has also drawn direct attention from the White House, trying to block the company from selling the much-anticipated machine to rival China.
For a company that the BBC once described as “relatively obscure”, the company will not only become a leader in chip making machines, it will actually Europe’s most valuable technology company.
the same as ASML and himax technologies, chipmaker Taiwan Semiconductor Manufacturing, better known as TSM (NYSE: TSM), has been in the spotlight for the past year. Often called the world’s most advanced chip maker, the company has received offers from various countries to open new production facilities as governments around the world begin to recognize the importance of domestic chip manufacturing. increase.
According to a recent Bloomberg article, Washington is offering nearly $50 billion in tax incentives to win chip makers, and countries such as Japan are offering similar incentives to attract technology companies such as TSM. We are taking steps. Last week, the Taiwan-based company revealed plans to open his second chip manufacturing plant in Japan in southwestern Kumamoto Prefecture, bringing the total investment to his nearly $7.4 billion. According to Bloomberg, his second factory at TMC is expected to go live in his late 2020s.
Moving from hardware to software, the most interesting stocks from an investor’s perspective are TakeTwo and EA Sports (NASDAQ:EA)The latter, which produced such well-known series of games as FIFA, The Sims and Battlefield, disappointed investors throughout 2022 as delays and cancellations impacted its earnings. As a result, the stock hit his 52-week low following earnings reports earlier this month.
Cowen analyst Doug Kreutz lowered his price target to $136 from $158, as the stock’s valuation has outperformed.
But despite low revenues and delays, the 2023 pipeline continues to look solid, with big releases coming up like Star Wars Jedi Survivor, FIFA Mobile, and EA Sports PGA Tour.
EA’s rival Take-Two Interactive (NASDAQ:TTWO) In many respects it follows a similar pattern. Both video game developers recently lowered their outlooks and reported lower earnings, but in some ways, Take-Two looks better than its peers. To start with the negative news, the company sees spending on some expensive content declining as consumers start to be more cautious about spending on entertainment such as streaming services and video games. Take-Two’s acquisition of Zynga, a well-known producer of mobile video games, has put it on a much faster growth trajectory, but its financials are under pressure.
Both stocks are “cheaper” than they were last year, but Take-Two looks like the higher-risk, higher-reward option of the two.
When it comes to video games, perhaps the most stable stock is Microsoft (NASDAQ:MSFT)
Microsoft’s acquisition of Activision Blizzard cements its position as a major player in the video game industry. The move makes the company the third-largest gaming company by revenue, behind Tencent and Sony. This acquisition gives us access to some of the most popular video game franchises such as Call of Duty and Candy Crush.
Additionally, the strong ecosystem around Xbox Game Studios and Xbox Game Pass will allow Microsoft to capitalize on the gaming industry’s growing trend toward subscription-based services. Overall, Microsoft’s influence on the video game industry makes it an attractive investment opportunity for investors looking for exposure to this area.
The most notable trend in the tech industry right now is undoubtedly AI. His ChatbotGPT, a well-known artificial intelligence chatbot that allows users to converse with different personalities and topics, is one of his most interesting technological developments these days.In that case, large technology companies such as NVIDIA (NASDAQ:NVDA) We recognize the revenue potential of AI as a service. Blue chip tech companies, whose stocks have fallen more than 50% in 2022 before rebounding late last year, are looking to new growth avenues, and AI is certainly one of the best bets.
Nvidia’s latest H100 GPU is poised to become a leading platform for deep learning and large-scale AI networks as it supports much more powerful AI workloads. As demand for data computing grows in the AI sector, Nvidia wants to give developers more firepower.
Given its exciting pipeline of AI-focused enterprise products and services, the company has given investors reason to be bullish again in 2023.