We recently published a list of 11 Oversold Tech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where VNET Group, Inc. (NASDAQ:VNET) stands against other oversold tech stocks to buy according to hedge funds.

Technology stocks have been among the best performing in the last 15 years. The technology sector has consistently outperformed the broad US market since the aftermath of the 2008 financial crisis, with particularly strong periods being the 2014-2021 and the 2023-2024. Technology stocks tend to perform well during economic expansions and periods of low interest rates, which stimulates the widespread adoption of technological advancements. During such periods, tech companies tend to trade at hyper-expensive valuations, which reflect the strong growth opportunities ahead. Many investors thus believe they become too overvalued, avoid having exposure to them, and consequently miss out on returns. The key point when it comes to technology stocks is that their valuations plummet instantly upon the slightest macroeconomic uncertainty and turmoil, which means that the best moment to acquire technology stocks is when they become oversold, and when fear dominates the market.

We believe that we are currently at an opportune time to increase exposure to technology, because it is the most beaten down sector year-to-date. Yardeni Charts show that the S&P Information Technology is currently trading at 24.4 forward P/E, much below the late 2024 peak around 30, marking an almost 20% decline in valuations (for comparison, the broad market’s valuation contracted by only 10%). Technology stocks haven’t been as cheap since 2023, when the Artificial Intelligence megatrend was just proliferating. Furthermore, the same source showed that the sector has experienced 2 consecutive quarters of negative revisions in earnings expectations, which means that Wall Street analysts have already priced in any short-term headwinds, reducing the chances of further negative surprises in the near future. In other words, the best possible scenario for buying is when both Wall Street and the market are pessimistic, which translates into weak expectations plus cheap valuations, and that’s exactly what appears to be happening with the technology sector right now.

READ ALSO: 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds

To sum up, we concluded that prices for technology stocks are lower now. The only question that remains to be answered is whether the macroeconomic background will be favorable enough to facilitate a new bull run for the tech sector. First, as we already mentioned above, technology stocks thrive under a low interest-rate environment – recent comments by a Federal Reserve official hint towards higher odds that interest rates will be cut as early as June. As a result, yields of short to intermediate-maturity US government bonds fell significantly last week, in anticipation of lower rates. This raises the probability that technological tailwinds will unmute, and businesses will spend more on AI, cloud computing, cybersecurity, and other tech projects that require large cash outlays and are sensitive to financing costs. We are also pleased to find confirmation of our hypothesis from leading consultants such as Deloitte. Here’s an excerpt from their recent 2025 technology industry outlook report:

“Despite recent uncertainty and economic turbulence, the technology industry appears poised for growth in 2025, aided by increased IT spending, AI investments, and a renewed focus on innovation. Some analysts project that global IT spending will grow by 9.3% in 2025, with data center and software segments expected to grow at double-digit rates. Worldwide spending on AI is anticipated to grow at a compound annual growth rate of 29% from 2024 to 2028. Although the tech layoff trend persisted in 2024, reductions appeared to slow compared to 2023.”

With that being said, the current market setup appears extremely favorable for investing in oversold tech stocks that could recover some or all of the value lost during the recent Trump Tariff Turmoil. With tariff exceptions granted to electronic products, and President Trump hinting towards the possibility that China tariffs will come down from the current unsustainable 145%, the outlook for the technology sector is getting brighter.

Our Methodology

To compile our list of oversold tech stocks, we used a screener to identify technology sector stocks that have a Relative Strength Index (RSI) below 40. We then compared the list with Insider Monkey’s proprietary database of hedge funds’ ownership and included in the article the top 11 stocks with the largest number of hedge funds owning the stock, ranked in ascending order.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

VNET Group, Inc. (NASDAQ:VNET)

RSI: 34.97

Number of Hedge Fund Holders: 26

​VNET Group, Inc. (NASDAQ:VNET) is a Chinese cloud services provider that offers managed hosting, cloud, and VPN services, allowing clients to connect to China’s internet backbone. The company operates over 50 data centers across more than 30 cities and has also developed AI supercomputing clusters to support artificial general intelligence applications.​

VNET Group, Inc. (NASDAQ:VNET) delivered strong financial results in Q4 2024, with net revenue increasing by 18.3% YoY and adjusted EBITDA growing by 63.8%. For the full year 2024, the company achieved net revenues of RMB 8.26 billion (up 11.4% YoY) and adjusted EBITDA of RMB 2.43 billion (up 19.1% YoY), both exceeding their increased guidance, while also achieving a turnaround with a net profit of RMB 248 million compared to a net loss in 2023.

VNET Group, Inc. (NASDAQ:VNET)’s wholesale business showed remarkable growth, with wholesale capacity in service increasing by 127 megawatts QoQ to 486 megawatts, and wholesale capacity utilized reaching 353 megawatts. Looking ahead to 2025, management expects to deliver 400 to 450 megawatts in the next 12 months, representing a significant increase of 161% to 194% from 2024’s total deliveries, with projected net revenues expected to grow from 10% to 13% YoY. The double-digit revenue and EBITDA growth guidance is further supported by at least 26 hedge funds owning the stock, which makes VNET one of the best oversold stocks to buy according to hedge funds.

Overall, VNET ranks 11th on our list of oversold tech stocks to buy according to hedge funds. While we acknowledge the potential of VNET as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than VNET but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.