S&P 500 Cheapest Tech Stocks 

The technology sector has made a remarkable recovery following a challenging end to 2022. While numerous tech stocks have experienced significant surges in value this year, some remain undervalued compared to their industry peers.

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The S&P 500 tech sector has emerged as the top performer year to date, demonstrating an impressive jump of approximately 33% in 2023. In contrast, the broader market index has recorded a gain of 9.5% during the same period.

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In light of these notable gains, an analysis using FactSet data to identify companies with the lowest forward price-earnings ratios relative to the average in the S&P 500 tech sector. The outcome of this screening process yielded a list of the ten most affordable stocks, along with insights from analysts regarding their future prospects.

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Despite the VanEck Semiconductor ETF already witnessing a remarkable surge of 45.2% year to date, several chip companies still feature among the least expensive stocks in the broad market index. Qualcomm, Skyworks Solutions, Microchip Technology, NXP Semiconductors, and On Semiconductor are all included in this list.

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Within the chip sector, Skyworks Solutions stands out as the most affordable stock, boasting a price-earnings (P/E) ratio of 11.04. FactSet data indicates that analysts, on average, have an optimistic outlook on the stock, as they are overweighting their positions. It is worth noting that Skyworks Solutions also possesses the smallest market capitalization among the selected chip companies. Although its shares have increased by more than 15% in 2023, they have experienced a decline of 3.3% over the past twelve months.

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Another chipmaker featured in the list is NXP Semiconductors, a Dutch company currently trading at a relative 12-month P/E ratio of 0.48. Analysts are also overweight on NXP, implying a positive sentiment towards the stock. NXP Semiconductors has witnessed a rise of over 14% year to date. However, the stock has faced challenges in the past twelve months, with a decline of more than 7%.

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Hewlett Packard Enterprise emerges as the most affordable tech stock on the list, with a relative P/E ratio of just 0.27 compared to the broader market tech sector.

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It is worth noting that according to FactSet data, the average analyst rating on shares of Hewlett Packard Enterprise is currently a hold. However, Refinitiv analysts estimate that the stock has an upside potential of 11.2% from Friday's closing price. While shares of the company have experienced a decline of almost 4% in 2023, the stock has witnessed a decrease of 2.8% over the past twelve months.

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