Given the ongoing global, digital transformation and rising demand for advanced technologies from almost all industries, the technology sector is expected to see solid growth this year and beyond. However, the rotation by investors away from tech stocks to cyclical stocks has brought many tech stocks down to trade now at reasonable prices. As such, we think Qualcomm (NASDAQ:QCOM) and Netgear (NASDAQ:NTGR) look undervalued at their current price levels given their immense growth potential. Read on.The resumption of economic activities has led investors to shift their focus to cyclical stocks to capitalize on their solid growth prospects. Consequently, many highly priced technology stocks have lost investors’ love lately and are trading at reasonable prices now. Concerns about rising inflation are also playing a major role in investors’ decisions to rotate away from expensive tech stocks. Tech stocks’ weakness is evident in the Technology Select Sector SPDR Fund’s (XLK) 9.2% gains over the past three months compared to the SPDR S&P 500 Trust ETF’s (SPY) 11.1% returns.
Nevertheless, we think the tech sector holds immense growth potential. In addition to the continued, global digital transformation, increasing use of advanced technologies such as artificial intelligence (AI), Internet of Things (IoT) and augmented reality (AR) in almost all industries could keep driving the sector’s growth.
So, we think it could be wise to bet now on Qualcomm Incorporated (QCOM) and Netgear, Inc. (NTGR) that are currently trading at discounts to their peers but hold immense growth potential.