Technology is the bedrock of today's world. From airplanes to your daily shopping, every modern day convenience relies on technology. Ever since the semiconductor was invented in the late 1900s, these chips have not only reduced their sizes dramatically but have also made their way into every gadget out there. At the same time, they have also become the source of significant tension between the world's two largest military powers, the United States and China.
While the U.S. and China rely on each other for trade, they are also at odds over chip production. America is the global leader in crucial technologies such as semiconductor design and testing, which lends it considerable leverage over the global economy. At the same time, the Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is the world's biggest contract chip manufacturer, a firm that makes chips for other companies such as Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA). As if this weren't enough to cement TSMC's importance in the global economy, the fact that most of its high end chipmaking facilities are located in Taiwan - a region that China claims is its territory - injects uncertainty into the global semiconductor supply chain since U.S. sanctions prohibit firms with ties to the Chinese military to procure advanced semiconductors with transistor sizes less than 7 nanometers.
This has caused the U.S. government to turn inwards and introduce incentives to spur domestic chip production. These incentives came in the form of the U.S. Chips Act which was introduced last year and promises billions of dollars in incentives to firms that set up chip manufacturing plants inside the U.S. and open research centers and other facilities as well. TSMC is also building a brand new chipmaking facility in Arizona, with Intel, who was at one point the leading company in the world in terms of technology, eager to regain the crown even as it battles inflation and an economic downturn.
Yet, even though chips power the technology industry, they are far from being the only avenues of interest in it. These days, one of the most popular topics in the industry is ChatGPT. The artificial intelligence powered chatbot which was first introduced last year has the ability to engage in conversation with humans and scan its vast data repository to provide information about a variety of topics. The latest version of ChatGPT, dubbed ChatGPT 4, is a dramatic leap from a simple speech assistant, as the AI is now able to use a camera to recognize and provide context to images. Additionally, ChatGPT's maker OpenAI explains that GPT 4 is capable of generating up to 25,000 words of text, more than eight times of its predecessor's 3,000 word limit. Its image recognition abilities enable it to predict that if strings holding a group of balloons were cut, the balloons would fly away.
However, at the same time, the tool's popularity and capabilities are also being misused by criminals to engage in identity theft. According to a fresh report from the European Police (Europol), criminals are using ChatGPT to create convincing text for phishing scams, as they are able to mimic the writing patterns of ethnic groups or organizations.
ChatGPT is powered by products designed by NVIDIA - a firm whose graphics processing units (GPUs) have also fueled another technological disruption that shook the financial sector. Cryptocurrencies are mined with NVIDIA's products, and the firm's revenue also suffers when cryptocurrency prices drop as was the case last year. Yet, despite its products being popular with the miners, NVIDIA itself believes that using them for ChatGPT is more worthwhile, as the firm's chief technology officer Mr. Michael Kagan shared in March 2023:
All this crypto stuff, it needed parallel processing, and [Nvidia] is the best, so people just programmed it to use for this purpose. They bought a lot of stuff, and then eventually it collapsed, because it doesn’t bring anything useful for society. AI does. . .With ChatGPT, everybody can now create his own machine, his own programme: you just tell it what to do, and it will. And if it doesn’t work the way you want it to, you tell it ‘I want something different’. . .I never believed that [crypto] is something that will do something good for humanity. You know, people do crazy things, but they buy your stuff, you sell them stuff. But you don’t redirect the company to support whatever it is.
Technology stocks were at the center of a massive financial bloodbath last year. High inflation and the effects of Russia- Ukraine war reduced consumers' discretionary purchasing power and hit the top line profits of the technology companies. At the same time, the Federal Reserve embarked on an aggressive journey to increase interest rates, which made investing in the stock market less attractive than compared to stable sources of income such as bank accounts or bonds. However, 2023 has mostly been a great year for the technology companies, as those firms that saw significant share price drops last year, rebounded sharply at the start of this year, with some optimism building in Wall Street about inflation coming down and reducing the incentive for the Fed to raise interest rates.
Technology Stocks To Buy That Are Too Cheap To Ignore
Photo by Ruben Sukatendel on Unsplash
With these details in mind, let's take a look at some cheap technology stocks, with the top three picks being Taoping Inc. (NASDAQ:TAOP), Arqit Quantum Inc. (NASDAQ:ARQQ), and CXApp Inc. (NASDAQ:CXAI).
Our Methodology
We started off our hunt for the cheapest technology stocks by looking at firms that have a price to earnings ratio of less than 10. Then, out of these, the top twelve were picked and are listed below.
Technology Stocks To Buy That Are Too Cheap To Ignore
Nokia Oyj (NYSE:NOK) is one of the more famous technology companies in the world. While it initially sold smartphones, the firm is now known for providing communications technology products such as switches and baseband equipment to carriers.
As of Q4 2022, 17 of the 943 hedge funds part of Insider Monkey's database had invested in Nokia Oyj (NYSE:NOK). The firm's largest shareholder is Israel Englander's Millennium Management which owns 128 million shares that are worth $27 million.
Nokia Oyj (NYSE:NOK) joins Arqit Quantum Inc. (NASDAQ:ARQQ), Taoping Inc. (NASDAQ:TAOP), and CXApp Inc. (NASDAQ:CXAI) as a great technology stock that's also quite cheap.
Himax Technologies, Inc. (NASDAQ:HIMX) is a Taiwanese semiconductor firm headquartered in Tainan City, Taiwan. The firm designs and sells products such as display circuits, controllers, and power management devices.
By the end of last year's fourth quarter, 11 of the 943 hedge funds polled by Insider Monkey had bought a stake in Himax Technologies, Inc. (NASDAQ:HIMX). Out of these, the firm's largest hedge fund shareholder is Jonathan Guo's Yiheng Capital which owns 5.1 million shares that are worth $31 million.
Koss Corporation (NASDAQ:KOSS) is an American company that was set up in 1953 and is headquartered in Milwaukee, Wisconsin. The firm makes and sells audio products such as headphones, speakers, and headsets in several countries such as the U.S., Canada, Malaysia, and Sweden.
Two of the 943 hedge funds part of Insider Monkey's Q4 2022 survey had invested in the company. Koss Corporation (NASDAQ:KOSS)'s largest investor is Israel Englander's Millennium Management which owns 44.256 shares that are worth $216,000. Its low P/E ratio also makes it a great cheap technology stock.
Canaan Inc. (NASDAQ:CAN) makes and sells cryptocurrency mining products such as miners using different processors and related accessories. The firm is also using its hardware to provide other companies with the ability to power their artificial intelligence solutions. It is headquartered in Beijing, China.
By the end of last year's fourth quarter, four of the 943 hedge funds part of Insider Monkey's database had bought the company's shares. Canaan Inc. (NASDAQ:CAN)'s largest hedge fund investor is Douglas Harold Hart Polunin's Polunin Capital which owns 1.3 million shares that are worth $2.8 million.
Arrow Electronics, Inc. (NYSE:ARW) is an American firm based in Centennial, Colorado. The firm sells a variety of semiconductor products such as resistors, switches, capacitors, and memory products.
Insider Monkey's Q4 2022 survey of 943 hedge funds revealed that 31 had held a stake in Arrow Electronics, Inc. (NYSE:ARW). Out of these, Cliff Asness' AQR Capital Management is the firm's largest shareholder. It owns two million shares that are worth $216 million.
Avnet, Inc. (NASDAQ:AVT) is an American firm that is headquartered in Phoenix, Arizona. It serves as a distributor of different semiconductor products and provides design and other services to several industries such as aerospace, telecommunications, and car manufacturing to allow engineers to integrate chips into their products.
After looking at 943 hedge funds for last year's fourth quarter, Insider Monkey found that 31 had bought Avnet, Inc. (NASDAQ:AVT)'s shares. The firm's largest investor in our database is Richard S. Pzena's Pzena Investment Management which owns 9.2 million shares that are worth $385 million.
Digihost Technology Inc. (NASDAQ:DGHI) is a Canadian firm based in Toronto, Canada. The firm is primarily a cryptocurrency miner with operations in America.
As of last year's fourth quarter, only one of the 943 hedge funds part of Insider Monkey's database had invested in Digihost Technology Inc. (NASDAQ:DGHI).
Taoping Inc. (NASDAQ:TAOP), Digihost Technology Inc. (NASDAQ:DGHI), Arqit Quantum Inc. (NASDAQ:ARQQ), and CXApp Inc. (NASDAQ:CXAI) are some top cheap technology stocks.