NVIDIA
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The company's shares soared following its latest impressive earnings report (its most modest this year), but there's a lot more to the tech space than the AI chip giant, and indeed, beyond its “Magnificent Seven” brethren.
Other tech stocks are performing extremely well and have a long growth trajectory ahead. Dell Technologies
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Dell, which is also riding the artificial intelligence wave, is at an all-time high. The company, which reports earnings on May 30, is thriving thanks to new enterprise servers powered by Nvidia's Blackwell chips. It's no longer the “Hey, buy Dell!” Dell of old. But the stock remains affordable, trading at just 20 times forward earnings.
Semiconductor company Marvel Technology
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Salesforce, a Dow component stock whose AI chip business is growing
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The company, which released its Einstein-generated AI GPT for its cloud software customers, is also scheduled to report earnings the week of May 27.
None of these stocks are as flashy as Nvidia, but that's OK: In fact, Daniel Cain, a portfolio manager on Artisan Partners' U.S. value team, says “boring-but-great tech” stocks are better buys.
One example is analog chip giant Texas Instruments.
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Cain appreciates that the company's semiconductors tend to last more than a decade, making them critical components for cars, industrial equipment and more cyclical consumer electronics. He points out that Texas Instruments has been busy moving manufacturing to factories in Utah and Texas. This “shoring” could help the company avoid becoming a regulatory or political target.
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Kane owns Texas Instruments.
The value of craftsmanship
The fund (ticker: ARTKX) also holds shares in Samsung Electronics, a South Korean-listed memory chip and mobile device maker, and Dutch chip designer NXP Semiconductors.
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For investors, some software companies could also be good bets, especially if the broader market is once again roiled by lingering fears about inflation and questions about when the Federal Reserve will raise interest rates. Trivariate Research recently ran a screen to find tech stocks with low correlations to inflation trends and interest rates. Autodesk
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Atlassian
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Nutanix
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Procore Technologies was among the top software stocks on the list.
The good news for tech investors is that there's growth to be found on the other side of the big players.
S&P 500 Index.
Even excluding the Magnificent Seven, the rest of the S&P 500 tech stocks are expected to post earnings growth of more than 10% over the next four quarters, according to Alex Athanasiou, a portfolio manager at Glenmade Investment Management.
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Athanasiou acknowledges that tech stocks are more expensive than the overall market, but he says he is considering adding semiconductor stocks to his company's portfolio. Despite high valuations, he says the overall tech sector remains attractive because returns on equity are also well above the market average.
“Investors don't need to fish at the bottom,” Athanasiou said. Barons“People are hungry for growth, but you don't have to be.”
You just need to know where to look.
Email: paul.lamonica@barrons.com
