In this article, we will take a look at the most undervalued tech giants to buy according to hedge funds.
These days, technology is a hot topic in every conversation as companies seize every opportunity to innovate and investors chase the right investments. While big names often grab headlines, some of the most profitable companies often remain under the radar.
According to a report by McKinsey & Company, titled “Economic conditions outlook, December 2025,” published on December 18, surveyed executives are ending 2025 with increased confidence in the macroeconomic environment and the company’s performance. The article discusses the latest McKinsey Global Survey, in which respondents indicated growing confidence in the overall outlook, as leaders focus on technology investments.
The publication advances by characterizing technology as “a growth opportunity,” particularly for big names. The author concluded that investment in AI and gen AI remains the “most reported high priority for business leaders to address.”
Keeping this in view, this article examines eight undervalued technology giants favored by hedge funds, highlighting that these companies are well-positioned for a potential rebound.
Photo by Adam Nowakowski on Unsplash
Our Methodology
For this article, we considered stocks in the Technology sector with market capitalizations exceeding $50 billion. After this initial screening, we further shortlisted stocks with a forward P/E between 8 and 22, a range that indicates a reasonable discount to the Nasdaq 100 Index. These stocks are then ranked by the number of hedge fund holdings, based on Insider Monkey’s database, as of Q3 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
8. TE Connectivity plc (NYSE:TEL)
Number of Hedge Fund Holders: 60
Upside Potential as of December 26, 2025: 20.54%
Market Capitalization as of December 26, 2025: $68.404 billion
As of December 26, TE Connectivity plc (NYSE:TEL) has a ‘Buy’ or equivalent rating from 65% of the analysts covering the stock. With a median price target of $280, the stock has an upside potential of around 21%. On December 19, Truist lifted the price target on TEL to $240 from $239, while maintaining a ‘Hold’ rating on the stock. This reflects an upside potential of 3%.
Following the inclusion of 2027 forecasts, the firm updated price targets for the semiconductor and artificial intelligence sectors. Although challenges associated with securing the power needed to run AI infrastructure and sourcing the funds required remain, AI infrastructure semiconductor stocks still “remain cheap” relative to their growth, Truist noted. The firm sees “more upside pressure” to guidance for the group relative to the diversified analog semis entering into 2026. AI capital expenditure upside will continue over the next year, the analyst concluded.
Earlier on December 10, Jefferies reaffirmed its Buy rating on TE Connectivity plc (NYSE:TEL) with a $280 price target. According to the analyst, the firm’s 2026 Multi-Industrials sector positioning is based on three themes: 1. exposure to power and data centers; 2. margin expansion through internal productivity; and 3. a cyclical recovery after two years of subdued volumes.
TE Connectivity plc (NYSE:TEL) is an Ireland-based company specializing in connectivity and sensor solutions. Founded in 1941, the company operates through two segments: Transportation Solutions and Industrial Solutions.
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 63
Upside Potential as of December 26, 2025: 14.31%
Market Capitalization as of December 26, 2025: $188.717 billion
As of December 26, QUALCOMM Incorporated (NASDAQ:QCOM) has a ‘Buy’ or equivalent rating from half of the analysts covering the stock. With a median price target of $200, the stock has an upside potential of 14.28%. Among the analysts bullish on the stock is Fang Boon Foo, an analyst at DBS, who maintained a ‘Buy’ rating on the company on December 5 and a price target that mirrored the consensus estimate.
Later, on December 18, QUALCOMM Incorporated (NASDAQ:QCOM) announced the completion of its acquisition of Alphawave IP Group plc, a quarter ahead of the expected timeline. This acquisition is a testament to the company’s strategy of establishing a foothold in the data center market. CEO and co-founder of Alphawave Semi, Tony Pialis, will lead the company’s data center business.
“Alphawave Semi’s expertise in high-speed connectivity technologies complements our Qualcomm Oryon CPU and Hexagon NPU processors,” stated Cristiano Amon, President and CEO of QUALCOMM Incorporated (NASDAQ:QCOM). “The addition of Alphawave’s technologies will strengthen our platforms and optimize performance for next-generation AI data centers.”
The venture aims to create a leading player in AI compute and connectivity solutions across several fast-growing markets, particularly data center applications.
Separately, on December 16, C.J. Muse from Cantor Fitzgerald lifted the price target on QUALCOMM Incorporated (NASDAQ:QCOM) to $185 from $170 and maintained a ‘Neutral’ rating. The firm’s confidence in SOX (Philadelphia Semiconductor Index) to lead the market is driven by its outperformance versus S&P by approximately 30 points in CY25, The Fly reported.
QUALCOMM Incorporated (NASDAQ: QCOM), headquartered in California, is a digital telecommunications provider operating across three segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives.
6. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 64
Upside Potential as of December 26, 2025: 27.38%
Market Capitalization as of December 26, 2025: $58.681 billion
As of December 26, Workday, Inc. (NASDAQ:WDAY) is a buy from 75% of the analysts covering the stock. While the target price ranges from $230 to $326, the median price target of $280 translates to an upside potential of 27.38%. Among the analysts positive on the stock is Siti Panigrahi, an analyst at Mizuho Securities, who reiterated a ‘Buy’ rating on the company and maintained a $275 price target on December 16. This reflects an upside potential of 25% from the current level.
Earlier on December 10, Investing.com reported that Freedom Capital Markets trimmed the price target on Workday, Inc. (NASDAQ:WDAY) to $280 from $290, maintaining a ‘Buy’ rating. This reaffirmation came after the company’s third-quarter fiscal 2026 results.
According to the Investing.com report, Workday, Inc. (NASDAQ:WDAY) delivered solid financial performance during the quarter, enhanced its product offering through the integration of Paradox, and accelerated its AI agent ecosystem. The company’s fourth-quarter revenue guidance surpassed investor projections, with operating margin matching the consensus estimate. That said, management also raised its full-year 2026 revenue outlook and maintained its operating margin projection.
Despite these bullish developments, Freedom Capital Markets identified several emerging risks, including the normalization of organic growth, contributions from M&A to the contracted revenue backlog, and integration issues with recently acquired assets.
Workday, Inc. (NASDAQ:WDAY) is a California-based provider of enterprise cloud applications. Founded in 2005, the company serves a range of industries, particularly financial services, healthcare, and technology.
5. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 66
Upside Potential as of December 26, 2025: 11.12%
Market Capitalization as of December 26, 2025: $167.41 billion
As of December 26, Accenture plc (NYSE:ACN) has a rating of ‘Buy’ or equivalent from slightly more than half of the analysts covering the stock. While the target price ranges from $205 to $330, the median target of $300 implies an upside potential of 11.12%. On December 19, Surinder Thind, an analyst at Jefferies, reaffirmed a ‘Hold’ rating on the stock, with a price target of $270.
Kevin McVeigh from UBS, among the analysts recommending the stock, lifted the price target on ACN to $320 from $315 and maintained a ‘Buy’ rating on December 19, according to TheFly. The analyst highlighted the company’s solid position in artificial intelligence and a steady demand environment.
UBS noted that the company’s Advanced AI achieved $1.1 billion in revenue in the first quarter, marking a 120% YoY surge. Similarly, Advanced AI bookings reached $2.2 billion, 76% higher than last year. Accenture is poised to scale generative AI efforts for clients, the analyst added.
What’s even more interesting is Accenture’s expansion into data center professional services, a market that is anticipated to double in size by 2030. UBS emphasized the company’s top 10 alliance partnerships, which it believes will enhance Accenture plc’s (NYSE:ACN) overall performance.
On the same day, RBC Capital raised the price target on Accenture plc (NYSE:ACN) to $295 from $285 and reaffirmed an ‘Outperform’ rating, following its first-quarter results, as reported by The Fly. The firm is optimistic about Accenture’s “increasingly evolving AI partnership ecosystem,” which will likely be a growth catalyst for the company.
Accenture plc (NYSE:ACN) is an Ireland-based provider of strategy, consulting, technology, and operations services. Incorporated in 1951, the company offers security, an intelligent platform, software engineering, and automation and global delivery services, among others.
4. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 74
Upside Potential as of December 26, 2025: 10.84%
Market Capitalization as of December 26, 2025: $308.343 billion
As of December 26, Cisco Systems, Inc. (NASDAQ:CSCO) has a ‘Buy’ or equivalent rating from slightly more than half of the analysts covering the stock. With a median one-year price target of $86.50, the stock exhibits a 10.84% upside potential. Among the analysts with a neutral view on the stock is Tim Long, an analyst at Barclays, who reaffirmed a ‘Hold’ rating on CSCO and set a price target of $76 on December 11.
Later on December 17, Morgan Stanley lifted the price target on Cisco Systems, Inc. (NASDAQ:CSCO) to $91 from $82, and kept the ‘Overweight’ rating unchanged. This implies an upside potential of approximately 17% relative to the current price. As reported by The Fly, the analyst highlighted that AI trade has expanded beyond semiconductor names within the year, favoring infrastructure names, especially within optical.
Trade can continue its momentum, particularly in optical, through the first half of next year, but investors will “need to get more selective for full year returns given multiples,” the analyst added in a year-ahead note on the group.
On the same day, Cisco Systems, Inc. (NASDAQ:CSCO) announced that shareholders approved an amended and restated version of the company’s 2005 Stock Incentive Plan at its annual meeting held a day earlier. Under the revised plan, the number of shares authorized will increase by 57,490,000 shares.
Cisco Systems, Inc. (NASDAQ:CSCO) is an American technology company that specializes in networking hardware, software, telecommunications equipment, and high-technology services.
3. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 84
Upside Potential as of December 26, 2025: 0.36%
Market Capitalization as of December 26, 2025: $62.166 billion
As of December 26, Western Digital Corporation (NASDAQ:WDC) has received a ‘Buy’ rating from 77% of analysts covering the stock. With a median price target of $182, the stock has an upside potential of a meager 0.36%. However, that limited upside is understandable, as the stock has quadrupled in 2025, with year-to-date gains of 303%.
On December 17, Mizuho reaffirmed its ‘Outperform’ rating on the company, with a price target of $180, right after an investor call with the company’s CFO, Kris Sennesael, and VP of IR, Ambrish Srivastava.
The analyst noted that Western Digital Corporation (NASDAQ:WDC) has solid visibility with its leading five customers, who have purchase orders in place through the end of 2026, and one customer has orders extending to CY27. What’s even more interesting is that the company is engaged in long-term agreements with customers through 2027-2029. Mizuho also highlighted strong pricing visibility under long-term agreements, with improved areal density that leads to better margins and a lower customer total cost of ownership.
On the same day, Morgan Stanley lifted the price target on Western Digital Corporation (NASDAQ:WDC) to $228 from $188, keeping the ‘Overweight’ rating. The firm favours cloud capex winners and product-cycle beneficiaries within the IT hardware market, remains bearish on stocks with increased memory exposure, and stays “increasingly more cautious” on memory-exposed names, the analyst stated in a year-ahead note.
Western Digital Corporation (NASDAQ:WDC) is a California-based company that provides data storage devices and solutions. Founded in 1970, the company offers its products through its computer manufacturers, distributors, and retailers.
2. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 88
Upside Potential as of December 26, 2025: 19.73%
Market Capitalization as of December 26, 2025: $149.666 billion
As of December 26, Adobe Inc. (NASDAQ:ADBE) has a ‘Buy’ or equivalent rating from 67% of the analysts covering the stock. With a median price target of $422.50, the stock has an upside potential of 19.73%. On December 17, Tyler Radke from Citi raised the price target on ADBE to $387 from $366 and kept a ‘Neutral’ rating. This revision, implying an upside potential of approximately 10%, follows the company’s updated model following the fiscal Q4 report. According to the analyst, the quarter demonstrated upside, but the fiscal 2026 outlook was mixed.
When Adobe Inc. (NASDAQ:ADBE) announced its fourth-quarter results on December 10, the company outperformed with an EPS estimate of $5.50, marginally above projections of $5.40. Similarly, the company delivered a revenue of $6.19 billion, surpassing the forecasted $6.11 billion. Since then, several analysts have adjusted their forecasts.
On December 15, BMO Capital trimmed the price target on Adobe Inc. (NASDAQ:ADBE) to $400 from $405, keeping an ‘Outperform’ rating. Earlier on December 11, Evercore ISI reduced the price target to $425 from $450 and reiterated an ‘Outperform’ rating. The firm noted that although the company’s FY26 guidance is solid, the outlook reflects moderate growth relative to FY25.
Adobe Inc. (NASDAQ:ADBE) is a California-based technology company operating through Digital Media, Document Cloud, Creative Cloud, Digital Experience, and Publishing and Advertising segments. Founded in 1982, the company is committed to changing “the world through personalized digital experiences.”
1. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 119
Upside Potential as of December 26, 2025: 26.25%
Market Capitalization as of December 26, 2025: $253.222 billion
On December 24, TheFly reported that Barron’s, in its Stock Picks column, stated that although the software sector has been volatile over the past few years, Salesforce, Inc. (NYSE:CRM) could rally as AI-related concerns ease and the company’s management remains focused on improving profitability. The report cites research from prominent analysts, including Oakmark Funds portfolio manager Bill Nygren and BTIG’s Allan Verkhovski.
According to the report, the stock traded at 9-times expected forward sales a year ago; however, Salesforce, Inc.’s (NYSE:CRM) valuation “currently stands at under six-times expected 2026 after a 30% pullback from all-time highs.” Barron’s emphasized BTIG’s view that investors are pricing in a “CRM demise” and opined that such views appear excessively bearish, noting that Agentforce is gaining momentum, as evidenced by its 330% annual recurring revenue growth in the third quarter.
Earlier, on December 19, Mizuho set Salesforce, Inc.’s (NYSE:CRM) price target at $340, implying an upside potential of approximately 28%. The analyst believes the company is systematically mitigating constraints to enhance the adoption of Agentforce. That said, Mizuho anticipates an improved year-over-year (CY26 versus CY25) performance, with potential for organic re-acceleration. The firm described the company’s current valuation, at less than 14x CY27E FCF, as “very compelling.”
Overall, Salesforce, Inc. (NYSE:CRM) has a ‘Buy’ or equivalent rating from 78% of the analysts covering the stock, as of December 26. While the price target ranges from $223 to $475, the median price target of $336 implies an upside potential of 26.25%.
Salesforce, Inc. (NYSE:CRM) is a California-based provider of customer relationship management (CRM) technology. Incorporated in 1999, the company connects companies and customers together through its core offerings, including Agentforce, Data Cloud, Industries AI, and Slack.
While we acknowledge the potential of CRM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRM and that has 100x upside potential, check out our report about this cheapest AI stock.
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