3 Top Tech Stocks to Buy Right Now

Worrying headlines have caused some high-quality technology stocks to trade at lower prices.

In strong markets, it's common for great technology stocks to be expensive, but currently, some top-tier companies have seen their stock prices drop despite the overall market being near its all-time high. This downturn is due to various factors like regulatory issues and global tensions. However, these companies are leaders in their sectors.

While this does not guarantee future success, the best time to buy these stocks at a good price is often during periods of temporary challenges.

Here are three excellent technology stocks that are currently undervalued due to added pressures. All three are set for long-term growth that can justify their current prices. Investing in these stocks while their prices are down could lead to great opportunities once the market stabilizes.

Key Regulatory Pressures on a Major Digital Ad Firm

Alphabet (GOOGL) has been under scrutiny since it lost an antitrust lawsuit in August. There are increasing calls for regulators to force the sale of its Google Chrome web browser and to impose restrictions on its YouTube platform and its AI app, Gemini.

As Alphabet's core revenue comes from digital advertising through Google Search and YouTube, fears about rising competition have impacted its stock price. Currently, Alphabet's stock trades at a forward price-to-earnings ratio of just 20, which is relatively low considering analysts predict a growth rate of 17%-18% in earnings over the next three to five years.

Despite the hurdles ahead, investor reactions may be more intense than necessary. If Chrome were to be sold, analysts estimate it could be worth around $20 billion, providing Alphabet with a significant cash influx. Although the rules could level the competitive field, Alphabet might still thrive in the long run. Additionally, Alphabet's cloud services are becoming increasingly vital to its business. This period of uncertainty could be seen as an ideal time to invest in Alphabet.

A Market Leader Navigating Geopolitical Challenges

ASML Holding (ASML), a company based in the Netherlands, is the only producer of extreme ultraviolet (EUV) lithography machines necessary for creating the advanced chips used in AI technology. ASML finds itself in a tough spot as tensions between the U.S. and China escalate, with the U.S. urging restrictions on machine sales to China, a vital market for ASML.

Due to these geopolitical pressures, ASML's stock has dropped nearly 40% from its highs earlier this year. Recently, the company issued cautious guidance, signaling a slowdown in orders from China that had surged in anticipation of potential trade restrictions.

While the semiconductor market goes through cycles and ASML appears to be in a slower phase right now, its unique position in the EUV machine market suggests long-term demand will continue to be strong. Analysts expect ASML's earnings to rise by 16%-17% annually for the next three to five years. Given this long-term growth potential, ASML's current pricing of 32 times earnings could be an appealing investment opportunity.

Geopolitical Concerns Affecting Production

Taiwan Semiconductor (TSM) also faces geopolitical pressures. As the world’s largest chip foundry, producing around 62% of global third-party semiconductor output, Taiwan Semiconductor plays a vital role in the tech industry. However, it operates in Taiwan, an island that China claims as part of its territory, leading to tensions that could escalate.

While the likelihood of military conflict is uncertain, Taiwan Semiconductor’s successful operation is critical in a scenario where China sees strategic value in the region’s technology hub. Historically, the U.S. has supported Taiwan’s economy, and Taiwan Semiconductor is working to spread its manufacturing presence outside Taiwan, with a plan to invest over $65 billion on new factories in Arizona.

Although the risks from China are significant, the potential benefits of Taiwan Semiconductor’s stock may outweigh these concerns. Currently, the company trades with a forward P/E of 27, a valuation that reflects its growth expectations of about 31% in earnings annually over the next three to five years. Given the demand for high-end chips driving a range of AI applications, investing in Taiwan Semiconductor remains a strong consideration despite geopolitical uncertainties.

Invest wisely. The balance of risk and opportunity is key in this current market environment.

stocks, technology, investment