Mega-cap tech stocks may capture all the headlines as Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) battle it out for top market cap — but that doesn’t mean there aren’t plenty of missed opportunities among smaller, lesser-known tech stocks.
Looking for tech stocks isn’t easy in today’s landscape. Over-concentration, higher debt costs, growing awareness of AI’s inherent limitations and more all combine to make picking select tech stocks tough. Reduced liquidity, greater volatility, and more sensitivity to bad news and market moves also make trading lesser-known tech stocks riskier than buying blue-chip counterparts.
Of course, at the same time, that’s what makes buying these tech stocks all the more rewarding. Here are a few to consider:
Photronics (PLAB)
Photronics (NASDAQ:PLAB) is a key player in today’s cutting-edge technology landscape with immense potential for future growth. Unlike other semiconductor stocks, Photronics specializes in the development of semiconductor photomasks. This technology is intricate but has profound implications for the future.
Firstly, Photronics’ photomasks are crucial for ensuring the precision and accuracy required in microchip manufacturing. These photomasks facilitate the advancement of artificial intelligence and quantum computing by enabling the creation of increasingly complex circuitry with greater precision. Additionally, they play a pivotal role in shrinking transistors and components, essentially driving Moore’s Law forward. This combination of precision and cost-effectiveness positions Photronics at the nexus of current and emerging technologies, making Photronics a strong candidate among lesser-known tech stocks.
Trading at just 12x earnings, Photronics is attractively priced for a tech stock. Its income is steady, if not spectacular, indicating solid financial health. Although relatively young in the semiconductor industry, Photronics stands to benefit significantly from the growing reliance on semiconductors across various sectors.
Yext (YEXT)
You’ve probably encountered Yext (NYSE:YEXT) or its diverse marketing products, perhaps without realizing it. With extensive market penetration, Yext’s platform is utilized by corporate giants like Samsung and Verizon (NYSE:VZ). However, its potential as a standout among tech stocks goes mostly unnoticed.
Yext provides an all-encompassing suite of digital marketing tools, including SEO, content management, reputation and review management, social media, and deep analytics to drive strategic decisions. As internet marketing grows increasingly complex, developing in-house expertise for all these demands becomes prohibitively expensive. Yext’s platform aggregates these essential services, offering a vital solution for navigating the digital marketing landscape. Moreover, Yext’s platform has inherent “stickiness” that fosters client loyalty, as the costs of switching to another system are high once integrated into Yext’s ecosystem.
The company’s latest earnings report was strong, highlighting significant AI integrations. While AI is now widespread, it remains underutilized in digital marketing, a gap Yext is effectively bridging. Yext’s recent per-share performance of $0.05 contrasts sharply with the previous year’s loss of $0.03. Despite this positive outlook and earnings beat, shares have declined this year, presenting an excellent entry point for investors. Yext offers a promising opportunity to invest in the future of AI-driven digital marketing and to gain a stake in lesser-known tech stocks.
Stem (STEM)
Stem (NYSE:STEM) stands out in the sustainable energy sector by merging renewable energy solutions with artificial intelligence. At the core of Stem’s offerings is Athena, a sophisticated control system that integrates and optimizes resources from generators, grid power, solar farms, and battery storage. Athena uses AI to make real-time decisions based on factors like weather and energy pricing, delivering a self-managing, efficient energy solution for large-scale enterprise clients.
Despite its current penny stock status, Stem has ambitious growth plans, with leadership aiming for a tenfold increase in value. The company’s strategic vision, outlined in its “AI and the Future of Energy” white paper, details how AI integration will drive efficiency and growth in sustainable energy markets.
Like many speculative tech stocks, Stem faces challenges such as a lack of profitability and cyclical sales that introduce variability. However, the company has progressed beyond its pre-revenue phase and has a growing portfolio of completed projects. Stem represents a promising long-term investment opportunity in the sustainable energy sector, particularly for those looking to capitalize on the emerging influence of AI within green infrastructure. Adding Stem to your portfolio could be a strategic move to benefit from the ongoing integration of AI in renewable energy.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.