With the S&P 500 and Nasdaq Composite both regularly setting new all-time highs in 2024, it’s harder to find promising tech stocks at attractive valuations. Market darling Nvidia already trades at 37 times forward earnings, while blue-chip stalwart Apple has a forward multiple of 31.
But if we dig deeper, we can find some healthy tech stocks that still look like bargains. For instance, these three cheap stocks — Micron Technology (NASDAQ: MU), Dell Technologies (NYSE: DELL), and Cisco Systems (NASDAQ: CSCO) — are likely to go higher. Here’s why.
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Micron is a leading producer of DRAM and NAND memory chips. It doesn’t lead either of those markets, but it generally produces denser chips than its larger competitors. The memory chip market is highly cyclical, and its latest downturn occurred in 2023 as the PC market cooled off, the 5G upgrade cycle in smartphones ended, and many data center companies prioritized purchases of AI-oriented GPUs over new memory chips. In Micron’s fiscal 2023 (which ended in August 2023), its revenue tumbled by 49% and it posted an adjusted net loss.
But over the past year, a new growth cycle kicked off as the PC and smartphone markets stabilized. Data center operators also finally looked beyond GPUs and began boosting their purchases of solid-state drives (SSDs) and high-bandwidth memory (HBM) chips to support new AI applications. In fiscal 2024, Micron’s revenue rebounded by 62% and it turned profitable again. For fiscal 2025, analysts expect Micron’s revenue and adjusted EPS to grow 52% and 587%, respectively, as the growth cycle accelerates.
Based on those expectations, Micron’s stock looks dirt cheap at 12 times forward earnings. Its growth will eventually cool off again, but this could be a great time to open a new position.
Dell, which returned to the public markets nearly six years ago, sells a wide range of PCs, PC peripherals, servers, and data storage products. Its PC business cooled off as fewer people bought new devices for remote work, and macro headwinds throttled the growth of its data storage business in the enterprise market. That’s why Dell’s revenue and adjusted EPS fell 14% and 6%, respectively, in its fiscal 2024 (which ended in February).
But for fiscal 2025, analysts expect its revenue and adjusted EPS to both grow by about 10% as the PC market stabilizes, data centers upgrade their storage devices, and it ramps up its production of dedicated AI servers. Dell generated 12% of its revenue from dedicated AI servers in its latest reported quarter, and it expects that business to drive most of its near-term growth. Super Micro Computer‘s recent problems could also drive even more AI server orders to Dell.
