Technology stocks offer investors the promise of growth in ways few other sectors can. After all, tech is synonymous with innovation, spawning new products, services, and features.
In 2025 through Nov. 18, the Morningstar US Technology Index rose 18.71%, while the Morningstar US Market Index gained 13.22%.
The 12 Best Tech Stocks to Invest in
These were the most undervalued tech stocks that Morningstar’s analysts cover as of Nov. 18, 2025.
- Nice NICE
- Endava DAVA
- Fiserv FISV
- HubSpot HUBS
- Adobe ADBE
- Globant GLOB
- Sabre Corporation SABR
- Sensata Technologies ST
- Monday.com MNDY
- Atlassian TEAM
- Oracle ORCL
- ON Semiconductor ON
To come up with our list of the best tech stocks to buy now, we screened for:
- Technology stocks that are undervalued, as measured by our price/fair value metric.
- Stocks that earn narrow or wide Morningstar Economic Moat Ratings. We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.
- Stocks that earn a Low, Medium, High, or Very High Morningstar Uncertainty Rating, which captures the range of potential outcomes for a company’s fair value.
Read more: The Market Is Betting Big on the Magnificent Seven, And Your Portfolio Might Be Too
Here’s a little more about each of the best tech stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of Nov. 18.
Nice
- Morningstar Price/Fair Value: 0.39
- Morningstar Uncertainty Rating: Medium
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Application
Software application firm Nice is the cheapest stock on our list of the best tech stocks to buy. Nice is an enterprise software company that serves the customer engagement and financial crime and compliance markets. The stock is trading 61% below our fair value estimate of $268 per share.
Nice provides cloud and on-premises software solutions that serve the customer engagement and financial crime and compliance markets. Most of its revenue is generated in the US, but international expansion has become a bigger priority.
The customer engagement segment contributes around 85% of total revenue. It is mainly driven by Nice’s flagship product, CXone Mpower, which is a cloud-native contact-center-as-a-service platform. CXone helps companies manage customer service. It brings together tools for handling phone calls, chats, emails, and social media messages in one place, so contact center agents can assist customers more efficiently. CXone is the world leader in the CCaaS market and is considered to be the most comprehensive platform. Nice’s CXone strategy is focused on winning large enterprise deals, increasing penetration in international markets, expanding reach through strategic partnerships, and continued product innovation, mainly integrating advanced artificial intelligence capabilities.
Nice earns about 15% of revenue from its financial crime and compliance business, which provides solutions to help financial institutions detect, prevent, and manage financial crimes (money laundering and fraud) and regulatory compliance. Nice’s strategy is to support financial institutions’ move to the cloud and expand its market reach through its two main cloud platforms, X-Sight and Xceed. X-Sight targets large financial institutions while Xceed is designed for midtier banks and financial institutions. The shift to the cloud has been slow for financial institutions, given their conservative nature and regulatory burdens. However, high switching costs mean this segment earns high margins despite being much smaller than the customer engagement segment.
Rob Hales, Morningstar senior analyst
Read more about Nice here.
Endava
- Morningstar Price/Fair Value: 0.46
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Infrastructure
Endava is a next-generation IT services company that primarily assists clients with their digital transformation efforts by creating customized software for them. Endava is an affordable tech stock, trading at a 54% discount to our fair value estimate of $13.60 per share. The software infrastructure firm earns a narrow economic moat rating.
Endava, based in the UK, is an IT services company focused on providing digital transformation and engineering services. It generates revenue primarily by charging clients on a time-and-materials basis for services such as consulting and advice, customized software development and integration, and quality assurance and testing. Endava is highly exposed to the financial-services sector, with nearly half of its revenue generated from the sector. Within financial services, Endava is known for its expertise in payments and private equity.
Like many of its peers, Endava’s core strategy is to land and expand, which involves securing major clients and increasing revenue through these relationships by providing them with an increasing range of services. Endava’s 10 largest clients account for around a third of group revenue, with the largest, Mastercard, contributing around 10%. Mastercard has been a client for over 20 years.
Endava focuses on the financial-services, technology, media, and telecom industries. The company aims to diversify its industry exposure by securing new clients from new verticals. In particular, Endava is targeting clients in the retail and healthcare sectors, as its current expertise is most transferable to these areas.
Similarly, the company is geographically concentrated, with around 33% of revenue generated in the UK and around 23% generated in continental Europe. To diversify, Endava is primarily growing its business in North America.
Endava’s delivery model is based on agile project management from employees in nearshore locations, which it plans to expand. To best serve its clients’ unique digital transformation goals, the flexibility of the iterative nature of agile project management is effective. Furthermore, the nonstandardized nature of these projects requires constant dialogue and interaction between Endava and its clients, which means having delivery teams with similar time zones to those of its clients (nearshoring) is best for delivering the project successfully and promptly.
Rob Hales, Morningstar senior analyst
Read more about Endava here.
Fiserv
- Morningstar Price/Fair Value: 0.49
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Information Technology Services
Next on our list of the best tech stocks to buy is Fiserv. Fiserv is a leading provider of core processing and complementary services, such as electronic funds transfer, payment processing, and loan processing, for US banks and credit unions, with a focus on small and midsize banks. The stock is trading at a 51% discount to our fair value estimate of $126 per share.
Fiserv’s merger with First Data in 2019 kicked off a string of three similar deals that took place in short order. While this deal clearly looked like a winner in recent years, the picture is now more cloudy.
First Data had underperformed its peers prior to the merger, as it was weighed down by an excessive debt load stemming from a leveraged buyout just before the financial crisis and the defection of a major bank partner. We believe this meaningfully limited its ability to reinvest and adapt in an industry that continues to evolve. However, resolving its financial issues put the company back on track. Further, Clover, the company’s small-business solution with similarities to Square’s offering, has boosted growth, with volume running at an annualized rate of over $300 billion. Clover offers much stronger pricing and is the type of platform we think the company needs to maintain and build on its leading position in the industry.
While the company’s performance over the past few years has been quite strong, new CEO Mike Lyons recently announced that he believes the company has been underinvesting and overly focused on boosting near-term growth. As a result, he intends to reset the business. This will necessitate greater investment and lower margins in the near term, along with lower growth. Clover remains the centerpiece of management’s growth plans, but even this business will likely see its revenue growth compress. Management’s One Fiserv’s plan is light on details, but the overall trend is clear. Near-term performance will weaken considerably, and 2026 is likely to be something of a transition year.
The covid pandemic did illustrate one potential negative of the merger: The acquiring business is significantly more macrosensitive than Fiserv’s legacy operations. Over the long term, Fiserv’s acquiring operations (and Clover specifically) should still be the company’s strongest engine for growth. Still, successfully resetting the business could be complicated if the macroenvironment sours before the new CEO can put the company back on a more stable path.
Brett Horn, Morningstar senior analyst
Read more about Fiserv here.
HubSpot
- Morningstar Price/Fair Value: 0.57
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Application
HubSpot provides a cloud-based marketing, sales, and customer-service software platform referred to as the growth platform. The firm earns a narrow economic moat rating, and the shares of its stock look 43% undervalued relative to our $650 fair value estimate.
We believe HubSpot is a leader in marketing and sales automation software for the midmarket. We see a long runway for growth as it gathers new customers and continues to move its existing clients up a tiered pricing structure and sell multiple hubs to larger clients. We also see small and midsize businesses and the midmarket as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Thus, we believe that HubSpot’s robust and expanding suite has helped carve out a defensible niche.
HubSpot provides a suite of software solutions that helps companies grow “better.” Taken together, the five hubs (marketing, sales, service, operations, CMS) combine to create the growth platform. HubSpot operates a “freemium” model that has allowed it to gather hundreds of thousands of free users, with approximately 15% of these moving into paid solutions. From the free version, a three-tiered system emerges, including Starter, Professional, and Enterprise. HubSpot’s goal is to create as a wide a funnel as possible for customer gathering, and then move users up the pricing tier as they evolve, and upsell them to additional hubs as their needs change. Loosely two thirds of annually recurring revenue comes from customers that started as free users, which we think demonstrates successful strategy execution. We think approximately 60% of customers are using multiple hubs. Meanwhile, average revenue per customer has been slowly increasing over time.
While we recognize that churn is typically higher for SMB customers than it is for enterprise customers, we see HubSpot as gradually moving up the curve to serve increasingly larger customers. Over the last several years the company significantly invested in the platform to make it more suitable for customers with up to 2,000 employees. As customer size increases, we think switching costs strengthen, which is impactful, as enterprise customers generate higher revenue and higher retention than SMB customers. We estimate the Enterprise tier makes up approximately 15% of the paying customer mix, which has slowly ticked up over time.
Dan Romanoff, Morningstar senior analyst
Read more about HubSpot here.
Adobe
- Morningstar Price/Fair Value: 0.58
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Wide
- Industry: Software–Application
Adobe provides content creation, document management, and digital marketing and advertising software and services to creative professionals and marketers for creating, managing, delivering, measuring, optimizing, and engaging with compelling content on multiple operating systems, devices, and media. The firm earns a wide economic moat rating, and the shares of its stock look 42% undervalued relative to our $560 fair value estimate.
Adobe has come to dominate in content creation software with its iconic Photoshop and Illustrator solutions, both now part of the broader Creative Cloud. The firm has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation. The December 2021 launch of Adobe Express helps further broaden the company’s funnel, as it incorporates popular features of the full Creative Cloud but comes in lower cost and free versions. The 2023 introduction of Firefly marks an important artificial intelligence solution that should also attract new users. We think Adobe is properly focusing on bringing new users under its umbrella and believe that converting these users will become more important over time.
CEO Shantanu Narayen provided Adobe with another growth leg in 2009 with the acquisition of Omniture, a leading web analytics solution that serves as the foundation of the digital experience segment that Adobe has used as a platform to layer in a variety of other marketing and advertising solutions. Adobe benefits from the natural cross-selling opportunity from Creative Cloud to the business and operational aspects of marketing and advertising. On the heels of the Magento, Marketo, and Workfront acquisitions, we expect Adobe to continue to focus its M&A efforts on the digital experience segment and other emerging areas.
The Document Cloud is driven by one of Adobe’s first products, Acrobat, and the ubiquitous PDF file format created by the company; it is now racing to become a $4 billion business. The rise of smartphones and tablets, coupled with bring-your-own-device and a mobile workforce, has made a file format that is usable on any screen more relevant than ever.
Adobe believes it is attacking an addressable market well in excess of $200 billion. The company is introducing and leveraging features across its various cloud offerings (like Sensei artificial intelligence) to drive a more cohesive experience, win new clients, upsell users to higher-price-point solutions, and cross-sell digital media offerings.
Dan Romanoff, Morningstar senior analyst
Read more about Adobe here.
Globant
- Morningstar Price/Fair Value: 0.59
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Information Technology Services
Globant is a next-generation IT services company that primarily assists clients with their digital transformation efforts by creating customized software for them. Trading 41% below our fair value estimate, Globant has an economic moat rating of narrow. We think this stock is worth $102 per share.
Globant, headquartered in Luxembourg but largely based in Latin America, is an information technology services company focused on providing digital transformation and engineering services. It generates revenue mainly by charging clients on a time and materials basis for services such as consulting/advice, customized software development and integration, and quality assurance and testing. Globant is primarily exposed to the media and entertainment and financial-services sectors, which each account for around 20% of revenue.
Like many of its peers, Globant’s core strategy is to land and expand—securing big clients and growing revenue in those relationships by increasingly providing these clients more services. Globant’s 10 largest clients account for around a third of group revenue, with the largest, Walt Disney, contributing around 10%. Disney has been a client for over 10 years.
The company is relatively concentrated geographically, with more than half of its revenue generated in North America. The company is now focused on diversifying geographically, particularly in Europe.
Globant’s “studio” delivery model is based on agile project management from employees in nearshore locations. By organizing itself in small units focused on a particular industry or emerging technology (studios), the company develops deep pockets of expertise and can deliver innovative solutions to its clients faster than many of its peers. To best serve a client’s unique digital transformation goals, the flexibility from the iterative nature of agile project management is effective. Furthermore, the nonstandardized nature of these projects requires constant dialog and interaction between Globant and its clients, which means it’s best to have delivery teams with similar time zones to its clients (nearshoring) so as to deliver the project successfully in a timely manner.
Rob Hales, Morningstar senior analyst
Read more about Globant here.
Sabre Corporation
- Morningstar Price/Fair Value: 0.60
- Morningstar Uncertainty Rating: Very High
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Infrastructure
Sabre holds the number-two air booking volume share in the global distribution system industry. Trading 40% below our fair value estimate, Sabre Corporation has an economic moat rating of narrow. We think this stock is worth $2.82 per share.
Despite near-term economic growth concerns caused by tariff uncertainty and the US government shutdown, which is negatively affecting its corporate and government business, we expect Sabre to reduce net debt/adjusted EBITDA to 6 times by the end of 2025 from 19 times in 2024, using proceeds from the prudent sale of its hospitality solutions business. We maintain our stance that Sabre will hold its position in global distribution systems, or GDS, over the next 10 years. This view is driven by a gradual recovery in corporate travel and Sabre’s leading network of airline content and travel agency customers, as well as its solid position in technology solutions for these carriers and agents. Sabre’s 30%-plus GDS air transaction share is the second largest of the three companies (behind narrow-moat Amadeus and ahead of privately held Travelport) that together control about 100% of market volume.
Sabre’s GDS enjoys a network advantage, which is the source of its narrow moat rating. As more supplier content (predominantly airline content) is added, more travel agents use the platform, and as more travel agents use the platform, suppliers offer more content. This network advantage is solidified by technology that integrates GDS content with back-office operations of agents and IT solutions of suppliers, which would require significant costs and time to replicate, and leads to more accurate information that is also easier to book. The firm’s network prowess should be supported by its technology partnership with wide-moat Alphabet and its transition to the cloud, both of which we see driving innovation and cost efficiencies. The company’s next-generation platform, SabreMosaic, is an open-source cloud-based artificial intelligence solution that makes it easier for airlines to customize its offering and upsell content.
The company’s GDS faces some risk of larger carriers making direct connections with larger agencies, although we expect these relationships to be the exception rather than the rule and expect Sabre to still be the aggregating platform in either case.
Dan Wasiolek, Morningstar senior analyst
Read more about Sabre Corporation here.
Sensata Technologies
- Morningstar Price/Fair Value: 0.60
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Scientific and Technical Instruments
Sensata Technologies is a global supplier of sensors for transportation and industrial applications. Trading 40% below our fair value estimate, Sensata Technologies has an economic moat rating of narrow. We think this stock is worth $48 per share.
We view Sensata Technologies as a differentiated supplier of sensors and electrical protection, predominantly for transportation markets. The firm has oriented itself to benefit from secular trends toward electrification, efficiency, and connectivity. Despite the cyclical nature of the automotive and heavy vehicle markets, electric vehicles and stricter emissions regulations provide Sensata the opportunity to sell into new sockets, which has allowed the firm to outpace underlying vehicle production growth by about 4% historically. We think such outperformance is achievable over the next 10 years, given our expectations for a fleet mix shift toward EVs and Sensata’s growing addressable content in higher-voltage vehicles.
In our view, Sensata’s ability to grow its dollar content in vehicles demonstrates intangible assets in sensor design, as it works closely with OEMs and Tier 1 suppliers to build its products into new sockets. We also think the mission-critical nature of the systems into which Sensata sells gives rise to switching costs at customers, leading to an average relationship length of roughly three decades with its top 10 customers. As a result of switching costs and intangible assets, we believe Sensata benefits from a narrow economic moat and we expect it to earn excess returns on invested capital for the next 10 years.
Over the next decade, we expect Sensata to focus on organic growth in electric vehicles and increasingly electrified industrial applications. The firm has historically been an active acquirer but is focusing on organic investment, reduced leverage, and increased shareholder returns in the medium term, of which we approve. After a misguided strategic foray into the telematics market, Sensata changed CEOs and divested its failed Insights business. We like the firm’s focus on electrification, which we feel is the most attractive growth opportunity available. Still, we believe new management has to prove an ability to extract consistent organic growth to investors. The firm’s ability to grow content in electric vehicles and outperform underlying global automotive production are the primary drivers of our investment thesis.
William Kerwin, Morningstar senior analyst
Read more about Sensata Technologies here.
Monday.com
- Morningstar Price/Fair Value: 0.64
- Morningstar Uncertainty Rating: Very High
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Application
Monday.com is a work management platform that allows for increased collaboration and visibility across an organization. Monday.com is an affordable tech stock, trading at a 36% discount to our fair value estimate of $241 per share. The software application firm earns a narrow economic moat rating.
Monday.com seeks to operate as the unified backbone of an organization through its flexible and broad WorkOS platform. The company’s strategy should continue to center on expanding within its enterprise customer base and broadening penetration across newer vertical solutions. Penetration within enterprise accounts remains relatively low, giving the company substantial room for growth and higher retention through deeper product adoption. Additionally, Monday’s horizontal platform approach positions it to compete not only against traditional work management peers but also entrenched incumbents in adjacent categories, expanding its total addressable market. While scaling these newer verticals will take time, we believe the opportunity is significant and should enhance customer stickiness, drive upsell potential, and support durable long-term growth.
Originally, the firm offered a work management solution targeting the greenfield collaboration and project management market. The platform’s flexibility and modular architecture enabled Monday to easily add additional solutions and target additional verticals: customer relationship management, product development, and IT service. These additions supported growth and enhanced its competitive position.
Historically, Monday.com targeted small and midsize businesses, or SMBs, where its intuitive platform resonated with a historically underserved customer base seeking access to flexible and enterprise grade tools. Over the years, it has moved upmarket to larger customers, creating more stability in the revenue base and mitigating some of the volatility inherent in smaller customers. Today, enterprise customers drive greater than one quarter (26%) of annual recurring revenue, which we expect to grow in the coming years.
Monday.com uses a software as a service, or SaaS, model, charging customers a monthly per-seat fee. As it has expanded into larger accounts, its go-to-market approach has shifted away from a predominantly product-led, performance marketing motion toward a more traditional enterprise sales model supported by channel partners, allowing for higher service levels, more efficient growth, and stickier relationships.
Alex Medow, Morningstar analyst
Read more about Monday.com here.
Atlassian
- Morningstar Price/Fair Value: 0.65
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Software–Application
Atlassian produces software that helps teams work together more efficiently and effectively. The firm earns a narrow economic moat rating, and the shares of its stock look 35% undervalued relative to our $230 fair value estimate.
Atlassian endeavors to “unleash the potential of teams” through better planning, project management, and workflow software, and we think its strong momentum is likely to continue in the coming years as the transition to the cloud continues. Atlassian’s original product, Jira, was designed as a workflow solution for software developers that has grown into a richly featured, easy-to-use, inexpensive, easy-to-buy application. The software is often bundled with Confluence, a collaboration tool. The company has also gradually moved upmarket toward enterprise customers, even as it continues to serve customers of all sizes.
Atlassian employs a distinct go-to-market strategy that eschews the traditional enterprise salesforce in favor of a low-cost, low-touch online marketing effort and e-commerce transactions on the firm’s website. Free versions further help drive a large funnel. This is done to simplify the purchasing and onboarding process. Because of the company’s web-based sales model, its sales and marketing expenses are among the lowest among enterprise software peers, leading to solid non-GAAP margins. That said, since sales and marketing expenses are typically the largest cost for software companies, we believe margins can expand significantly as the company matures. In the meantime, management believes its best marketing is a great product that is easy to buy and use that drives viral adoption within an organization once adopted by the first team.
Atlassian has excelled at upselling customers with more seats, additional products, and new use cases, and is also moving clients from on-premises to the cloud. We expect these factors to combine to drive strong top-line growth over the next five years. Retention is strong and upsell is obvious. In our view, new use cases are critical in driving long-term growth, as the service desk solution is applicable throughout an enterprise, whereas the IT-centric products have a narrower market. To that end, after its 2013 introduction, Jira Service Desk is already the first Atlassian solution that nearly one fifth of customers land with, as use cases have expanded to human resources and compliance.
Dan Romanoff, Morningstar senior analyst
Read more about Atlassian here.
Oracle
- Morningstar Price/Fair Value: 0.65
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Wide
- Industry: Software–Infrastructure
Oracle provides enterprise applications and infrastructure offerings through a variety of flexible IT deployment models, including on-premises, cloud-based, and hybrid. Trading 35% below our fair value estimate, Oracle has an economic moat rating of wide. We think shares of this stock are worth $340 per share.
The initial success of Oracle Cloud Infrastructure comes from its technological innovation that makes it a flexible and secure alternative to established hyperscalers like Amazon Web Services, Microsoft Azure, or Google Cloud Platform. More recently, OCI’s strong client focus and ability to scale put it squarely at the center of the booming AI ecosystem, leading to skyrocketing bookings with key AI stakeholders such as OpenAI, Meta, and xAI. We believe OCI is on track to become a leading infrastructure provider for AI training and inference workloads; however, Oracle also faces significant challenges in securing the resources, most particularly GPU chips, necessary to deliver the capacity required by its AI customers.
Oracle has long been a major supplier of both relational database systems and enterprise software. The company’s relational database boasts a premium market positioning that offers industry-leading security and stability at a higher price. Although Oracle Database still plays a dominant role in handling some of the world’s most mission-critical data workflows, the company’s dominance in the database industry is gradually fading due to emerging database products more tailored to enterprises’ specialized data workflows. We think Oracle has made substantial progress in modernizing its database offering by bringing multicloud database to other hyperscalers. This is a win-win-win arrangement that benefits Oracle, other cloud providers, and customers simultaneously. As Oracle further expands its portfolio with AI Lakehouse and AI Data Platform, we expect the database to remain an important growth engine for the company.
Oracle is one of the only companies that offers an integrated AI portfolio across data, infrastructure, and software. We think Oracle’s current product lineup is in the best shape it has been in, and the company has the capacity to both retain its traditional on-premises customers migrating to the cloud and acquire new customers. In our view, cloud transition will continue to serve as a tailwind to Oracle’s revenue growth in the coming years.
Luke Yang, Morningstar analyst
Read more about Oracle here.
ON Semiconductor
- Morningstar Price/Fair Value: 0.65
- Morningstar Uncertainty Rating: High
- Morningstar Economic Moat Rating: Narrow
- Industry: Semiconductors
ON Semiconductor rounds out our list of best tech stocks to buy. Onsemi is a supplier of power semiconductors and sensors focused on the automotive and industrial markets. The stock is 35% undervalued relative to our fair value estimate of $70 per share.
We believe Onsemi is a power chipmaker aligning itself to the differentiated parts of its portfolio in order to accelerate growth and margin expansion. We expect the firm to outpace the growth of its underlying markets over the next five years as it tailors its portfolio of chips and sensors to pursue secular trends toward electrification and connectivity that allow it to sell into new sockets. Onsemi is the top supplier of image sensors to automotive applications like advanced driver-assist systems, or ADAS, and its semiconductors enable power transfer and conversion in electric vehicles and renewable energy—all of which we expect to keep Onsemi’s sales growth above that of its underlying markets.
We think that Onsemi will be vulnerable to cyclicality in the long term but that its portfolio realignment will lend itself to more durable returns through a cycle. The firm’s increased focus on sticky verticals, as well as its differentiated sensor and silicon carbide technologies, contribute to our narrow economic moat rating. Onsemi’s bread and butter historically was in more commoditylike chips, but we expect the firm to focus on higher-value applications in the auto and industrial end markets going forward and in turn earn more-consistent returns on invested capital.
We expect Onsemi to focus on expanding margins over the medium term. Management has invested heavily in pruning and improving its manufacturing efficiency, and we expect it to see the fruits of these efforts. We also think the firm will continue to focus its investments on the auto and industrial markets, which are higher-growth and higher-margin than its legacy consumer and smartphone markets. We expect more cutting-edge silicon carbide chips to make up a greater mix of sales over the next five years, too. We think management faces execution risk in hitting its lofty goal of 53% non-GAAP gross margin but expect a focus on higher-margin verticals and an improved manufacturing footprint to get it to the low 50s over the next five years from a previous midcycle margin below 38%.
William Kerwin, Morningstar senior analyst
Read more about ON Semiconductor here.
How to Find More of the Best Tech Stocks to Invest in
Investors who’d like to extend their search for top tech stocks can do the following:
- Review Morningstar’s comprehensive list of technology stocks to investigate further.
- Stay up to date on the technology sector’s performance, key earnings reports, and more with Morningstar’s technology sector page.
- Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
- Use the Morningstar Investor screener to build a shortlist of tech stocks to research and watch.
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