MW 7 tech stocks to consider buying now, after the Nasdaq's slump

By Michael Brush

'We'll look back on this and think this was a good opportunity,' managers of this top technology fund predict

Tech is one of the best places to look for bargain-priced stocks now, because the sector has been hit so hard. The worst of the tariff storm could be behind us. Meanwhile, the U.S. economy will likely avert a recession, since employment is holding up and companies generally have strong balance sheets. They don't have the financial vulnerabilities that can create the kind of trouble that turns slowdowns into recessions.

For help identifying attractive stocks in the tech sector, I turned to money managers at the Putnam Global Technology Fund PGTYX, because they have a strong long-term performance record.

"We'll look back on this and think this was a good opportunity to buy some quality names near the lows," says fund manager Andrew O'Brien. Below are seven tech stocks that O'Brien and co-manager Di Yao shared in a recent interview.

1. Taiwan Semiconductor: Shares of pre-eminent computer-chip maker Taiwan Semiconductor $(TSM)$ traded recently at about 14 times forward earnings, which is a 37% discount to the five-year average forward P/E ratio, according to data provider LSEG. That's too cheap, Putnam Global Technology's Yao says, especially considering the stock is down on some misplaced fears.

One of those fears is that U.S. tariffs will hurt its business. "Taiwan Semiconductor has mitigated the concerns by promising to invest $165 billion in the U.S. so that the U.S. can have leading-edge chip manufacturing on its own soil," Yao says.

Another concern, that Taiwan Semiconductor shares could get hit if China uses force to take over Taiwan, is also exaggerated, Yao says. "China is not going to do anything before they are sure they have military prowess that is greater than the allies backing Taiwan. That is not going to happen in the next two or three years," Yao says.

Yao also says it makes little sense that Taiwan Semiconductor trades at a discount to its customers. "The valuation gap is too big," he says.

2. ASML: The advanced chip-production equipment and software supplier ASML $(ASML)$ also looks undervalued due to some misplaced fears. ASML's forward P/E ratio of 26.5 is a 27% discount to its trailing five-year average, according to LSEG.

Investors are concerned that two of the Dutch company's biggest customers, Intel $(INTC)$ and Samsung (KR:005930), have cut orders. But end-market chip demand from Nvidia $(NVDA)$, Qualcomm $(QCOM)$ and others drives demand for ASML products - and this demand is unlikely to decline much, Yao says. These buyers will simply get more semiconductors from other suppliers, mainly Taiwan Semiconductor. It will need help from ASML to expand capacity.

ASML may also benefit from tariffs and deglobalization, if these forces continue to encourage chip makers to build plants in the United States.

3. Sea: This Singapore-based e-commerce company, which is popular in Southeast Asia, has a lot of growth potential, Yao says. One reason is that e-commerce penetration in Southeast Asia is low. E-commerce as a percentage of retail sales is 10%, compared with 16% in the U.S. and 27% in China, says the research group eMarketer.

The "catch up" angle helps explain Sea's (SE) robust growth. Fourth-quarter earnings advanced 37%, and the company projects gross merchandise volume will grow 20% this year. Yao says investors aren't pricing in this growth potential.

Another positive is that more than half the population in Southeast Asia remains underbanked or unbanked. This suggests decent growth for SeaMoney, Sea's fintech banking, lending, digital-payments and asset-management platform. SeaMoney analyzes customer behavior on its Shopee shopping platform for insights on credit risk.

4. & 5. Broadcom and Marvell: Despite increased market skepticism about artificial intelligence, O'Brien and Yao remain bullish on the space. Some of the biggest AI chip growth will be spurred by internal chip development at hyperscalers like Alphabet $(GOOGL)$, Microsoft $(MSFT)$ and Amazon.com $(AMZN)$. They're developing custom chips to differentiate their AI offerings.

But this won' t be easy. "As smart as the Alphabet, Microsoft and Amazon engineers are, they need help," O'Brien says. They're turning to Broadcom $(AVGO)$ and Marvell $(MRVL)$ for chip design and development expertise.

6. Spotify Technology: The world's biggest streaming-music platform boasts around 700 million monthly active users and more than 250 million paying subscribers in more than 180 countries. Those numbers suggest that Spotify $(SPOT)$ has a lot of room to convert nonpaying customers into subscribers, especially as it builds out new content in podcasts and audiobooks, O'Brien says.

Spotify has gone easy on price increases over the years, which suggests it also has room to charge more for subscriptions. "There is a lot of latent pricing power," O'Brien says. The upshot: O'Brien expects healthy revenue and profit margin growth, for which the market will reward Spotify investors over time.

7. Seagate Technology: Data-storage company Seagate $(STX)$ is a stealth AI play. It benefits from the ongoing growth in cloud computing driven by increasing demand for AI. "Hard drives are considered a declining technology, but 80% of cloud storage is on hard disk drives," O'Brien says. "We are in a classic hard-drive upcycle."

Seagate has an edge because it was an early investor in a technology called heat-assisted magnetic recording, or HAMR. This increases storage capacity by heating disks during writing, which makes them more receptive to magnetic changes.

"Seagate made the right decision over a decade ago to invest in HAMR at a time when its viability was being questioned," O'Brien says. "HAMR adds capacity to drives without adding to costs, which means higher margins." That should help drive the stock higher, he adds. Seagate's forward P/E ratio of 8.7 is 60% below its five-year average, according to LSEG.

Michael Brush is a columnist for MarketWatch. At the time of publication, he owned TSM, AMD, AVGO, NVDA, ASML, QCOM, SE, AVGO, MRVL, GOOGL, MSFT and AMZN. Brush has suggested TSM, AAPL, AMD, AVGO, NVDA, ASML, INTC, QCOM, SE, AVGO, MRVL, GOOGL, MSFT and AMZN in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks

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-Michael Brush

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April 14, 2025 12:23 ET (16:23 GMT)

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