“Hidden Gems in Tech: 10 Undervalued Stocks to Watch in 2025”
Despite the tech sector’s reputation for sky-high valuations, there are still hidden opportunities for savvy investors. While the Morningstar US Technology Index has surged by 30.16% over the past year—outpacing the broader US Market Index’s 23.92% gain—tech stocks are currently estimated to be 5% overvalued overall. Yet, several standout companies are trading at attractive discounts, offering potential for significant returns.
Here are the 10 best tech stocks to buy right now, according to Morningstar’s fair value estimates as of February 19, 2025. These companies boast either a wide or narrow economic moat, indicating a competitive edge that could drive long-term growth.
1. Sensata Technologies (ST): Riding the EV Wave
• Price/Fair Value: 0.59 (41% undervalued)
• Economic Moat: Narrow
• Industry: Scientific & Technical Instruments
Sensata Technologies leads the list as the most undervalued tech stock. A global supplier of sensors for transportation and industrial applications, Sensata is strategically positioned to benefit from the growing electrification trend in the auto industry. Despite past setbacks in the telematics market, a renewed focus on electric vehicle sensors and electrified industrial applications could drive long-term gains.
Analysts highlight the firm’s strong relationships with top automotive players—some lasting over 30 years—thanks to its specialized sensor designs and mission-critical systems.
2. NICE Ltd. (NICE): Powering the Future of Customer Engagement
• Price/Fair Value: 0.62 (38% undervalued)
• Economic Moat: Narrow
• Industry: Software - Application
NICE offers cutting-edge cloud-based solutions for customer engagement and financial crime prevention. Its flagship product, CXone, is a leader in contact center software, designed to enhance omnichannel digital interactions. With only 15-20% of contact centers currently operating in the cloud, NICE is well-positioned for substantial growth as businesses make the digital shift.
Their financial crime and compliance services also show strong potential, especially as financial institutions increasingly prioritize risk management in a digitized landscape.
3. Sabre Corporation (SABR): A Leader in Travel Tech
• Price/Fair Value: 0.70 (30% undervalued)
• Economic Moat: Narrow
• Industry: Software - Infrastructure
Sabre holds the second-largest global market share in air bookings through its Global Distribution System (GDS). Despite challenges from declining corporate travel demand, Sabre’s strong network of airline content and travel agencies gives it a durable competitive advantage.
Its next-gen platform, SabreMosaic, utilizes AI and cloud-based solutions to enhance airline customization and upselling opportunities, making it a strong candidate for long-term growth as the travel industry continues to rebound.
4. Endava PLC (DAVA): Digital Transformation Specialist
• Price/Fair Value: 0.73 (27% undervalued)
• Economic Moat: Narrow
• Industry: Software - Infrastructure
Endava, a UK-based IT services firm, is at the forefront of digital transformation, especially within the financial services sector. With top clients like Mastercard and a strategy focused on expanding into retail and healthcare, Endava is poised for significant growth.
Their agile project management approach and emphasis on nearshore delivery ensure efficient service tailored to client needs—supporting a target of 20% annual organic revenue growth.
5. Taiwan Semiconductor Manufacturing Company (TSMC): Chip Manufacturing Giant
• Price/Fair Value: 0.74 (26% undervalued)
• Economic Moat: Wide
• Industry: Semiconductors
TSMC dominates the semiconductor foundry market with a 60% global share. As a key supplier for major tech firms, TSMC is at the heart of cutting-edge chip production. Its advantage lies in its ability to consistently stay ahead of competitors through superior technological capabilities.
With long-term growth driven by AI, high-performance computing, and the Internet of Things (IoT), TSMC remains a solid pick for investors looking for sustained returns in the tech space.
6. ON Semiconductor (ON): Accelerating Electrification
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Semiconductors
ON Semiconductor specializes in intelligent sensing and power solutions, playing a vital role in the global shift toward electrification. The company’s focus on energy-efficient innovations, including EV infrastructure and advanced driver-assistance systems, supports its strong growth trajectory.
7. Adobe Inc. (ADBE): A Creative Powerhouse
• Price/Fair Value: Not disclosed
• Economic Moat: Wide
• Industry: Software - Application
Adobe’s dominance in creative software remains unchallenged, thanks to its market-leading products like Photoshop, Illustrator, and Acrobat. Its transition to a subscription-based model has driven consistent revenue growth, with new AI-powered features set to boost future adoption.
8. Fidelity National Information Services (FIS): Fintech Giant in Transition
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Information Technology Services
FIS offers financial technology solutions to banking institutions globally. Despite facing recent challenges, including market saturation, its focus on modernizing payment infrastructure and enhancing digital banking solutions positions it for a recovery.
9. Manhattan Associates (MANH): Supply Chain Innovator
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Software - Application
Manhattan Associates specializes in supply chain and omnichannel commerce software, making it a key player as businesses look to optimize logistics and warehouse operations in a post-pandemic world.
10. NXP Semiconductors (NXPI): Driving Smart Technology Integration
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Semiconductors
NXP focuses on developing secure connectivity solutions for embedded applications, with strong exposure to the automotive and IoT markets. As demand for smart devices and autonomous driving technology rises, NXP is well-positioned for significant growth.
Final Thoughts: A Sector Full of Potential
While the tech sector may appear overvalued at first glance, these ten stocks offer undervalued opportunities with strong growth potential. From semiconductor giants like TSMC and ON Semiconductor to software innovators like NICE and Endava, this list offers diverse options for tech-focused investors ready to capitalize on emerging trends in AI, electrification, and digital transformation.
Which of these stocks will power your next investment move?
Despite the tech sector’s reputation for sky-high valuations, there are still hidden opportunities for savvy investors. While the Morningstar US Technology Index has surged by 30.16% over the past year—outpacing the broader US Market Index’s 23.92% gain—tech stocks are currently estimated to be 5% overvalued overall. Yet, several standout companies are trading at attractive discounts, offering potential for significant returns.
Here are the 10 best tech stocks to buy right now, according to Morningstar’s fair value estimates as of February 19, 2025. These companies boast either a wide or narrow economic moat, indicating a competitive edge that could drive long-term growth.
1. Sensata Technologies (ST): Riding the EV Wave
• Price/Fair Value: 0.59 (41% undervalued)
• Economic Moat: Narrow
• Industry: Scientific & Technical Instruments
Sensata Technologies leads the list as the most undervalued tech stock. A global supplier of sensors for transportation and industrial applications, Sensata is strategically positioned to benefit from the growing electrification trend in the auto industry. Despite past setbacks in the telematics market, a renewed focus on electric vehicle sensors and electrified industrial applications could drive long-term gains.
Analysts highlight the firm’s strong relationships with top automotive players—some lasting over 30 years—thanks to its specialized sensor designs and mission-critical systems.
2. NICE Ltd. (NICE): Powering the Future of Customer Engagement
• Price/Fair Value: 0.62 (38% undervalued)
• Economic Moat: Narrow
• Industry: Software - Application
NICE offers cutting-edge cloud-based solutions for customer engagement and financial crime prevention. Its flagship product, CXone, is a leader in contact center software, designed to enhance omnichannel digital interactions. With only 15-20% of contact centers currently operating in the cloud, NICE is well-positioned for substantial growth as businesses make the digital shift.
Their financial crime and compliance services also show strong potential, especially as financial institutions increasingly prioritize risk management in a digitized landscape.
3. Sabre Corporation (SABR): A Leader in Travel Tech
• Price/Fair Value: 0.70 (30% undervalued)
• Economic Moat: Narrow
• Industry: Software - Infrastructure
Sabre holds the second-largest global market share in air bookings through its Global Distribution System (GDS). Despite challenges from declining corporate travel demand, Sabre’s strong network of airline content and travel agencies gives it a durable competitive advantage.
Its next-gen platform, SabreMosaic, utilizes AI and cloud-based solutions to enhance airline customization and upselling opportunities, making it a strong candidate for long-term growth as the travel industry continues to rebound.
4. Endava PLC (DAVA): Digital Transformation Specialist
• Price/Fair Value: 0.73 (27% undervalued)
• Economic Moat: Narrow
• Industry: Software - Infrastructure
Endava, a UK-based IT services firm, is at the forefront of digital transformation, especially within the financial services sector. With top clients like Mastercard and a strategy focused on expanding into retail and healthcare, Endava is poised for significant growth.
Their agile project management approach and emphasis on nearshore delivery ensure efficient service tailored to client needs—supporting a target of 20% annual organic revenue growth.
5. Taiwan Semiconductor Manufacturing Company (TSMC): Chip Manufacturing Giant
• Price/Fair Value: 0.74 (26% undervalued)
• Economic Moat: Wide
• Industry: Semiconductors
TSMC dominates the semiconductor foundry market with a 60% global share. As a key supplier for major tech firms, TSMC is at the heart of cutting-edge chip production. Its advantage lies in its ability to consistently stay ahead of competitors through superior technological capabilities.
With long-term growth driven by AI, high-performance computing, and the Internet of Things (IoT), TSMC remains a solid pick for investors looking for sustained returns in the tech space.
6. ON Semiconductor (ON): Accelerating Electrification
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Semiconductors
ON Semiconductor specializes in intelligent sensing and power solutions, playing a vital role in the global shift toward electrification. The company’s focus on energy-efficient innovations, including EV infrastructure and advanced driver-assistance systems, supports its strong growth trajectory.
7. Adobe Inc. (ADBE): A Creative Powerhouse
• Price/Fair Value: Not disclosed
• Economic Moat: Wide
• Industry: Software - Application
Adobe’s dominance in creative software remains unchallenged, thanks to its market-leading products like Photoshop, Illustrator, and Acrobat. Its transition to a subscription-based model has driven consistent revenue growth, with new AI-powered features set to boost future adoption.
8. Fidelity National Information Services (FIS): Fintech Giant in Transition
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Information Technology Services
FIS offers financial technology solutions to banking institutions globally. Despite facing recent challenges, including market saturation, its focus on modernizing payment infrastructure and enhancing digital banking solutions positions it for a recovery.
9. Manhattan Associates (MANH): Supply Chain Innovator
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Software - Application
Manhattan Associates specializes in supply chain and omnichannel commerce software, making it a key player as businesses look to optimize logistics and warehouse operations in a post-pandemic world.
10. NXP Semiconductors (NXPI): Driving Smart Technology Integration
• Price/Fair Value: Not disclosed
• Economic Moat: Narrow
• Industry: Semiconductors
NXP focuses on developing secure connectivity solutions for embedded applications, with strong exposure to the automotive and IoT markets. As demand for smart devices and autonomous driving technology rises, NXP is well-positioned for significant growth.
Final Thoughts: A Sector Full of Potential
While the tech sector may appear overvalued at first glance, these ten stocks offer undervalued opportunities with strong growth potential. From semiconductor giants like TSMC and ON Semiconductor to software innovators like NICE and Endava, this list offers diverse options for tech-focused investors ready to capitalize on emerging trends in AI, electrification, and digital transformation.
Which of these stocks will power your next investment move?