Valuation recovery of tech stocks in progress: These 8 US stocks are worth paying attention to

From 2022 to 2023, the US technology sector experienced a sharp correction, with many high-quality companies seeing stock declines of over 50%. As market sentiment gradually becomes more rational, the recovery of the fundamentals of tech stocks starting in 2024 has become a trend. Investors’ concerns are no longer “Will tech stocks fall further?” but rather “Which tech stocks have the potential for valuation recovery?”

The once-hot concepts of cryptocurrencies, NFTs, and the metaverse faced cold winds in 2022—NFT markets declined by 90%, crypto capital entered a winter, and the metaverse story lost its heat. This round of adjustment has precisely filtered out tech companies with solid fundamentals. This article highlights 8 tech stocks that not only weathered the winter but also found new growth engines amid industry transformation.

8 Tech Stocks Most Expected for Valuation Recovery

Apple (AAPL): Moat of Ecosystem Stickiness

Market Cap: $2.36 trillion | Dividend Yield: 0.62% | EPS: $5.99

In Warren Buffett’s portfolio, Apple is the largest holding, accounting for 26.2%. This is no coincidence. Apple has over 2.2 billion active devices worldwide, and this massive user base ensures a very high frequency of contact with Apple ecosystem products.

From an investment perspective, Apple’s growth logic does not rely on hardware sales but on service revenue growth driven by user stickiness. Cloud storage, app stores, subscription services, and other high-margin businesses continue to grow with the active user base, which is the core reason for Apple’s stock resilience.

NVIDIA (NVDA): Leader in the AI Chip Race

Market Cap: $510 billion | Dividend Yield: 0.08% | EPS: $4.34

The explosive popularity of ChatGPT has directly boosted demand for AI computing chips. NVIDIA has undoubtedly become the biggest beneficiary—whether it’s ChatGPT, Google Bard, or other large models, the underlying computing power almost all comes from NVIDIA’s chips.

The company announced collaborations with tech giants like Microsoft, Oracle, and Google to jointly provide AI cloud services. In this AI race, NVIDIA holds the most critical production tools, a position that is difficult to shake in the short term. As global AI infrastructure accelerates, NVIDIA’s growth certainty and sustainability are highly promising.

Broadcom (AVGO): High Dividend Semiconductor Player

Market Cap: $240 billion | Dividend Yield: 3.19% | EPS: $40.76

Among tech stocks, Broadcom’s dividend yield stands out. At 3.19%, it far exceeds the market average of 1.7%, and over the past five years, dividends have grown at a compound rate of nearly 30%.

This high dividend stems from Broadcom’s stable cash flow in the semiconductor field. The increasing demand for chips in cloud computing, IoT, and 5G markets provides a stable income foundation. For investors seeking cash returns, Broadcom offers a rare balance of growth and defensiveness.

Amazon (AMZN): Undervalued Multinational Giant

Market Cap: $981.6 billion | Dividend Yield: — | EPS: $1.51

Despite persistent macroeconomic weakness, Amazon’s performance remains solid. In the streaming sector, Amazon has extremely high user stickiness; even raising subscription rates has not caused large-scale user loss. More notably, its advertising business is gaining market share from Google, Meta, and Snap, whose ad growth has nearly stagnated.

From a fundamental perspective, Amazon’s cloud services, e-commerce, and advertising form a solid revenue base. This diversification makes it relatively resilient to risks. The current stock price still underprices the company’s medium- and long-term potential.

Adobe (ADBE): Indispensable Content Creation Tools

Market Cap: $159.6 billion | Dividend Yield: — | EPS: $15.28

From PDF to Photoshop, Adobe’s products have long been daily tools for hundreds of millions of users worldwide. The barriers formed by this habitual use give Adobe strong pricing power.

Latest earnings show that document cloud products have become a new growth point. The company has maintained rapid revenue growth despite uncertain macro conditions. Management’s confidence in sustained growth is based on a deep understanding of product demand and market prospects.

Netflix (NFLX): Streaming Leader Rebounds

Market Cap: $149.1 billion | Dividend Yield: — | EPS: $11.42

The competitive landscape of streaming has undergone profound changes in the past two years. Facing challenges from Disney and Comcast, Netflix was forced to adjust its business model—from a single subscription to a “subscription + advertising” model.

This strategic shift has exceeded expectations. The latest quarterly report shows that new user additions far surpassed market expectations, reflecting increased consumer acceptance of low-cost + ad-supported plans amid economic downturns. After experiencing long-term user declines, Netflix has finally reversed its downward trend and is back on a growth track.

Google (GOOG): Search Monopoly Still Firm

Market Cap: $1.17 trillion | Dividend Yield: — | EPS: $5.10

The emergence of ChatGPT once raised concerns about Google’s search dominance. When Bard was launched with errors, Google’s stock fell over 7%, and its market cap evaporated by $100 billion. But the market’s pessimism seems overdone.

According to Statcounter’s latest data, as of December 2024, Google still controls 89.9% of global search traffic. In the short term, conversational AI has not changed user search habits; in the long term, the fundamental demand for search remains unchanged. With its leading position in search and relatively reasonable valuation, Google remains a choice for value investors.

PayPal (PYPL): Undervalued Payment Network

Market Cap: $85 billion | Dividend Yield: — | EPS: $4.89

PayPal’s 2022 was bleak—its stock price fell over 80% from its high. But from a fundamental standpoint, the company’s business performance remains robust, and this divergence between stock price and fundamentals indicates severe undervaluation.

The platform has 435 million active accounts, and this large user base and transaction volume provide a moat. Management’s commitment to returning 75% of free cash flow via share buybacks will continue to enhance per-share value. The current valuation level is highly attractive for long-term investors.

Summary

In 2024, the fundamentals of tech stocks are gradually improving, but the market’s valuation premium has not yet fully reflected this improvement. The 8 US tech stocks above not only represent different growth logic but also possess unshakable competitive advantages in their respective fields. For investors optimistic about the long-term prospects of the tech sector, now is a key moment to pay close attention.