In the world of technology stocks, it’s common to see market leaders priced at premium valuations, particularly during bull markets. However, even the best tech companies experience downturns, often due to short-term challenges like regulatory scrutiny or geopolitical tensions. While these factors may create volatility, they can also present attractive opportunities for investors willing to look beyond the noise and focus on long-term growth.
Below, we’ll discuss three top tech stocks currently facing adversity but still poised for significant growth in the coming years. Despite their current struggles, these companies are in dominant positions within their respective industries, and now may be the right time to consider buying them at discounted prices.
1. Alphabet: Dominating Digital Ads Despite Regulatory Scrutiny
Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), the parent company of Google, is no stranger to regulatory challenges. In August 2024, Alphabet lost an antitrust lawsuit that has led to significant scrutiny from regulators. There have been calls for the company to sell its Google Chrome browser and impose restrictions on deals that protect YouTube and Gemini, its AI platform, from competition. These developments have caused some uncertainty around Alphabet’s future, particularly in its dominant digital advertising business, which makes up the bulk of the company’s revenue.
However, despite these regulatory hurdles, Alphabet remains undervalued. Currently trading at just 20 times forward earnings, Alphabet’s stock is priced attractively compared to its long-term growth potential. Analysts forecast the company’s earnings to grow by 17% to 18% annually over the next few years. Additionally, the potential sale of Chrome could bring in up to $20 billion, providing Alphabet with a cash infusion.