We recently published a list of analysts' top 10 affordable tech stocks to buy, and in this article we'll look at how Seagate Technology Holdings plc (NASDAQ:STX) stacks up against other affordable tech stocks.
No doubt, technology continues to change rapidly. In a technology-rich world, investors and analysts have plenty of options. As we all know, Artificial Intelligence (AI) has been at the forefront of the conversation for the past few years.
US stocks have recovered slightly from recent lows as economic data has given confidence in the health of the US economy. The Technology Select Sector SPDR Fund has gained around 19% or more year-to-date. Much of this rally in the IT sector has been driven by optimism about AI technology. However, some hints of interest rate cuts have also supported the overall rally.
The latest data puts the global AI market at $196.63 billion (estimated by Grand View Research), representing an increase of approximately $60 billion from 2022 onwards. This growth is driven by the increasing number of practical applications of AI technology, from content creation to self-driving cars.
The growth of artificial intelligence (AI) and extended reality (XR)
AI should continue to advance rapidly, with a focus on areas such as natural language processing, computer vision, and generative AI. PWC reports that by 2030, approximately 45% of total economic benefits will come from product enhancements, driving consumer demand. AI is expected to deliver more personalized, engaging, and affordable products, and increase product diversity. The largest economic benefits from AI are expected to come from China (26% increase in GDP in 2030) and North America (14.5% increase). This equates to $10.7 trillion, accounting for approximately 70% of the global economic impact.
Extended Reality (XR), known as the fusion of Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR), is expected to create immersive experiences across industries, primarily in the gaming and entertainment sector. Rising usage of smartphones, growing adoption of smart electronic devices, and introduction of 5G technology are expected to be the major growth drivers for the North American augmented reality market.
In particular, media companies have been exploring the potential of using XR technology as a storytelling and advertising medium for many years, and the interactive advertising campaigns and product visualization components of XR should drive growth in the advertising industry.
Cybersecurity Technology – Need and Emergence
The cybersecurity technology market is projected to reach USD 190.4 billion in 2023 and is expected to reach USD 298.5 billion by 2028 (according to Markets and Markets data), which represents a CAGR of approximately 9.4%. This healthy growth is expected to be driven by the increasing sophistication of cyber threats, the expanding digital landscape, and the urgent need for data protection. Hence, cybersecurity solutions such as data encryption, firewalls, and antivirus software are being used to protect and transmit data.
The story continues
Technologies such as AI, machine learning (ML), and automation are widely used in cybersecurity technologies to improve threat detection and predictive analytics. The growing demand for industrial robots and increasing adoption of managed security services should create new opportunities in the market. Robot cybersecurity solutions are also trending towards protecting endpoints, and connectivity stacks help prevent data breaches and asset downtime.
Robotics Trends
With the introduction of digitalization and the Industry 4.0 revolution, robotic automation has become widely accepted across industries, resulting in dramatic changes to traditional production and operational procedures. Industry 4.0 develops smart factories where machines can collaborate with human workers and other machines in real time. This is done using cloud computing, IoT, and cyber-physical systems.
The emergence of numerous technologies focused on production management and the introduction of automation solutions remain key elements of the current productivity enhancement policy. Apart from this, industrial robots are becoming more widely known and are being implemented across the manufacturing and healthcare industries. Moreover, the demand is primarily driven by the rising labor costs, prompting manufacturers to replace human labor with machines. In particular, Asia and Europe are being eyed as major growth regions in the world.
The growth of smart factories or smart manufacturing is expected to emerge from rapid digitization and rising demand for industrial automation across various industries. Another factor expected to support its growth over the next few years is the widespread use of Manufacturing Execution Systems (MES) and advanced data models for process-specific operations. The market for smart factories continues to gain momentum due to the increasing use of refurbished industrial robots and radio frequency identification (RFID) systems.
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Is Seagate Technology Holdings plc (STX) the best affordable tech stock to buy, according to analysts?
Technician configuring network attached storage drives.
Seagate Technology Holdings (NASDAQ:STX)
Estimated PER as of August 23: 16.58x
Potential upside: 19.72%
Estimated EPS growth this year: 433.3%
Seagate Technology Holdings plc (NASDAQ:STX) is a leading supplier of hard disk drives for data storage to the business and consumer markets.
Seagate Technology Holdings plc (NASDAQ:STX) is focused on innovation, with research and development spending of approximately $1 billion in fiscal 2024. The company has supported advancements such as the Circularity Program, which aims to reduce e-waste.
Seagate Technology Holdings plc (NASDAQ:STX) continues to shift its portfolio to focus on high-capacity drives for cloud and enterprise customers as consumer applications for traditional HDDs are switching to faster flash-based solid-state drives.
Experts and analysts believe that the demand for high-capacity drives will continue over the next five years as businesses look to capture more data and adopt multi-tiered storage approaches. Given the sector's shift towards cloud computing and AI-driven workloads, nearline cloud solutions are expected to be a major demand driver.
The company's performance to date has been primarily driven by a strong product portfolio and healthy market presence, but rising demand for data storage and the expansion into cloud services should drive future growth. The company's investments in advanced technologies such as heat-assisted magnetic recording (HAMR) position it to take advantage of emerging trends and applications.
Northland Securities raised their target price on shares of Seagate Technology Holdings Inc. (NASDAQ:STX) from $119.00 to $142.00. The firm gave the stock an “outperform” rating on July 24. There are 44 hedge funds in Insider Monkey's database holding shares of Seagate Technology Holdings Inc. (NASDAQ:STX) as of Q2 2024.
Overall, STX ranks seventh on the list of most affordable tech stocks to buy, according to analysts. While we acknowledge the potential of STX as an investment, we believe that some highly undervalued AI stocks have a better chance of delivering higher returns in a shorter time frame. If you're looking for highly undervalued AI stocks that are more promising than STX but still trade for less than five times their earnings, check out our report on the cheapest AI stocks.
Read next: The $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and NVIDIA Has “Become a Wasteland” According to Jim Cramer.
Disclosures: None. This article was originally published on Insider Monkey.
