We recently published a list of the 8 best long-term tech stocks to invest in now. In this article, we’ll take a look at how STMicroelectronics NV (NYSE:STM) stacks up against other tech stocks that are great long-term investments.
After a dire macroeconomic situation in 2022, the technology sector came to the rescue of the market in 2023. Investments in advanced technologies such as generative AI continue to show great potential for future business growth.
According to CNBC’s Q3 CFO Council Survey, 48% of CFOs said tech industry growth will outpace all other sectors in the next six months. Additionally, Leian Mitrione, investment management partner at the Curran Family Office, emphasized in an interview with CNBC on September 23 that the technology sector is a big beneficiary of the recent Fed rate cuts. Lower interest rates are good for technology companies, which often thrive in this environment.
The ongoing AI theme is also a key driver of the strong performance of technology companies. He further notes that while mega-cap tech stocks have traditionally been seen as a safe haven during times of economic uncertainty, the changing interest rate environment is broadening the focus to smaller, economically sensitive sectors. He said it was possible. Nevertheless, the strong momentum for AI-powered technologies is likely to continue for some time.
Global technology spending in 2024 is optimistic
High interest rates, economic concerns, and geopolitical issues slowed global technology spending in 2023, according to Deloitte’s 2024 Technology Outlook. However, there is growing optimism in 2024, with global IT spending growth expected to be between 5.7% and 8%. Growth areas include investments in software, IT services, and AI, with AI spending potentially reaching $200 billion by 2025. Cloud computing and cybersecurity are also expected to be in strong demand.
The report says that although Gen AI is gaining momentum, it is expected to grow slowly in 2024 and grow even more in 2025 as it is integrated into software and business processes to improve productivity and efficiency. states that it has been done. Demand for AI hardware is expected to exceed $50 billion next year, but businesses continue to explore AI monetization strategies.
Improve energy efficiency with AI
Furthermore, the growing influence of large technology companies and increased reliance on AI are significantly increasing energy demand. We discussed this in our article on 13 Big Tech Stocks to Buy Now. Below is an excerpt from the article.
“With the rise of big tech companies and the growing use of AI, a notable recent trend that people have started to notice is an increase in the demand for electricity. The owner recently went so far as to purchase a nuclear-powered data center for $650 million.
The main driver of this increased demand is the need for AI development. Many energy-conscious investors may see this new trend as a red flag for big tech companies. However, Jensen Huang points out that AI requires a lot of energy to train, but once developed and trained, it can also help save energy. In particular, he said that this development will make AI so advanced that it will ultimately provide solutions that will change the way energy is used and make businesses infinitely more energy efficient. ”
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Concerns about the power needed to power AI are justified, but industry pioneers like Nvidia CEO Jensen Huang say the technology itself can help solve that problem.
our methodology
In this article, we use the Finviz Stock Screener to identify 27 tech stocks with market caps above $10 billion, analyst ratings of Buy or Buy-equivalent, and average price targets for upside of more than 20%. I have identified it. As of September 26, we narrowed the list down to the eight stocks with the greatest increase in average analyst price target. Tech stocks that perform well over the long term are listed in descending order of increase in average analyst price target.
We also mentioned hedge fund sentiment for each stock, pulled from the Insider Monkey database of over 900 elite hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Is STMicroelectronics NV (NYSE:STM) the best long-term tech stock to invest in now?
Is STMicroelectronics NV (NYSE:STM) the best long-term tech stock to invest in now?
STMicroelectronics NV (NYSE:STM)
Analyst average price target upside range: 39.93%
Number of hedge fund holders: 16 people
STMicroelectronics NV (NYSE:STM) is a leading global semiconductor manufacturer that designs, develops and markets a wide variety of semiconductor integrated circuits and discrete devices.
This is one of the best long-term tech stocks to invest in right now. The stock has a consensus rating of “Buy” from 26 analysts, and the average price target of $41.25 represents a 39.93% upside from current levels as of September 26th.
Its products are used in a wide range of applications including automotive, telecommunications, industrial automation, and consumer electronics. With a customer base of over 200,000 and a network of thousands of partners, the company is dedicated to creating solutions that address the evolving challenges and opportunities of the microelectronics industry.
STMicroelectronics’ (NYSE:STM) product portfolio is extensive, including key components such as microcontrollers, advanced analog integrated circuits, sensors, and power management devices.
Diversification allows us to serve different sectors such as automotive, industrial, personal electronics, communications, and computing. Its focus on sustainability is evident in the company’s commitment to become carbon neutral in Scope 1 and 2 emissions by 2027, with a partial target for Scope 3 emissions. .
Recently, the company announced its 4th generation STPOWER silicon carbide (SiC) MOSFET technology on September 24th. The latest developments set new standards in power efficiency, density and strength, specifically meeting the demands of both the automotive and industrial sectors.
This technology is particularly suited for traction inverters, which are essential components of electric vehicle (EV) powertrains. The company plans to introduce further advancements in SiC technology by 2027, demonstrating the company’s commitment to innovation in the semiconductor field.
STMicroelectronics (NYSE:STM) has taken important steps to improve shareholder value. In the second quarter, the company distributed $73 million in cash dividends and made $88 million in share repurchases as part of a broader effort to conclude a $1.04 billion share repurchase program that began in July 2021. was executed.
In June, the company announced an even more ambitious stock buyback plan with two programs totaling up to $1.1 billion over the next three years. These actions demonstrate a strong commitment to returning capital to shareholders while focusing on growth.
STMicroelectronics (NYSE:STM) was part of the portfolio of 16 hedge funds tracked by Insider Monkey during the second quarter, with total holdings of $231.78 million. DE Shaw is the company’s largest shareholder with a position valued at $96,072,000 during the 2nd quarter.
Overall, STM ranks 5th on our list of best tech stocks for long-term investing. While we see the potential of STM as an investment, we believe AI stocks have a better chance of delivering and achieving higher returns. shorter period. If you’re looking for AI stocks with better prospects than STM, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: Morgan Stanley’s 15 best humanoid robot stocks to buy and Jim Cramer says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
