It didn’t take long for stocks to bounce back after the tech-heavy Nasdaq 100 plunged into a nearly 14% correction. Though the bargains in the tech scene aren’t as good as last week, there’s still likely ample value to be had in some of the analyst-favored names that are still well off their highs. When it comes to innovative tech firms still shooting for growth, such pullbacks and corrections can act as great opportunities for traders and long-term investors alike.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
In this piece, we’ll use TipRanks’ Comparison Tool to narrow in on three high-growth tech stocks — CDNS, DDOG, and FSLR — that have fallen but still have potentially high upside (between 24% and 27% at the time of writing) based on today’s slate of analysts’ price targets.
Cadence Design Systems (CDNS)
In the case of CDNS stock, I’m inclined to stay bullish, along with Wall Street. Shares of the chip design software developer Cadence Design Systems quickly recovered after shedding nearly 25% of their value. Among the contributing factors behind CDNS latest 12% rally are last week’s market bounce and a notable upgrade from Piper Sandler. Also, demand for AI design solutions will likely keep heating up for years.
Piper Sandler’s latest upgrade to overweight from neutral had many investors rushing to get back into CDNS shares. In a recent note, Piper Sandler analyst Clarke Jeffries noted that recent challenges relating to China and the changes in its verification processes were “likely temporary.” Indeed, such changes and ongoing China woes have created a rather messy near-term haze that clouded the long-term secular growth opportunity. Whether we’ve reached the quarterly trough remains to be seen.
Despite the recent cooldown in AI chip stocks, top-of-the-line AI chips still face blistering demand. As firms race to pack more punch into smaller and smaller form factors, the design process will become increasingly difficult. Aside from benefiting from surging demand for AI chips, Cadence is also tapping into AI to help designers optimize and verify chip designs with AI products in its Joint Enterprise Data and AI (JedAI) Platform, such as Cerberus and Verisium.
Growth has stalled recently, but this is largely due to transitory headwinds. As the company continues investing heavily in AI-augmented chip design while the industry continues pouring ample cash into semiconductor R&D, it’s hard not to believe Cadence is on the fast track to high double-digit growth. Additionally, at 45.4 times forward price-to-earnings (P/E), shares are close to the cheapest they’ve been all year. For those reasons I see CDNS stock as a Buy.
What Is the Price Target for CDNS Stock?
According to analysts, CDNS stock is a Strong Buy, with nine unanimous Buys assigned in the past three months. The average CDNS stock price target of $341.00 implies 25.6% upside potential.
Datadog (DDOG)
After Datadog beat expectations for the recent quarter, and despite a flat year-to-date performance, I am bullish on DDOG stock. Shares of the cloud-monitoring firm have stayed in the doghouse since the epic sell-off of 2022. Still, down around 40% from all-time highs, the misunderstood data analytics solution provider may finally be worth a second look as the company moves ahead with its “land-and-expand” business model, which entails cross-selling existing customers with other value-adding services. Perhaps a big acquisition could help Datadog level up its ecosystem.
Datadog stock enjoyed a nice relief rally after some solid June earnings were released. Adjusted per-share profits were $0.43, just ahead of the $0.37 analysts’ expectations. Though the third-quarter sales guide wasn’t great (calling for $660-664 million vs. analyst hopes for $665 million), the earnings beat seemed enough to keep the stock in the green for the week.
Moving ahead, Datadog could be hungry to make a sizeable deal to accelerate its “land-and-expand” strategy. In a prior piece, I noted that the proposed acquisition of GitLab (GTLB), reportedly testing the market, would be too much for Datadog to chew.
Perhaps some smaller-scale DevOps firms would be a better fit if the firm is keen on making a big splash in the scene. As tech valuations begin to climb again, there’s also no shame in teaming up with other firms to innovate on various initiatives. Hence, the company’s latest partnership with Akamai Technologies (AKAM) for work on enterprise security is intriguing.
What Is the Price Target for DDOG Stock?
Analysts say DDOG stock is a Strong Buy, with 23 Buys and three Holds assigned in the past three months. The average DDOG stock price target of $144.68 implies a 26.5% upside potential.
First Solar (FSLR)
Our final contestant is solar panel maker First Solar (FSLR), fresh off a beatdown on fears over the implications of a Trump presidential victory. However, I am bullish on FSLR stock as well. With Kamala Harris and the Democrats gaining traction in the polls, perhaps FSLR stock has room to regain some of the ground lost since its peak in June. Regardless of how the U.S. election pans out, First Solar is the gold standard in solar panel tech. As such, I’m staying bullish on the analyst-favored name, which also found its way into Dr. Michael Burry’s portfolio in the last quarter.
Further, given the ESG (environment, social, governance) factor and soaring energy demands accompanying the AI data center boom, solar stands out as a top place to invest for investors seeking durable secular growth stories. The company’s thin-cell Cadmium Telluride (CadTel) panels have distinct advantages over traditional crystalline silicon photovoltaic cells.
Notably, they’re cheaper (and greener) to make and perform better under certain conditions (high heat and humidity). As First Solar ramps production while shooting for 28% cell efficiency by 2030, the solar innovator stands out as head and shoulders above the rest in the solar scene.
In short, FSLR is a high-tech innovator in a fast-growing field with the manufacturing know-how to meet what could be sky-high demand for its products in these early innings of the data center boom. At 17.5 times forward price-to-earnings, the stock trades at a premium to the solar industry average of 13.2 times despite its durable competitive advantages.
What Is the Price Target for FSLR Stock?
Analysts say FSLR stock is a Strong Buy, with 21 Buys and four Holds assigned in the past three months. The average FSLR stock price target of $286.82 implies a 24.6% upside potential.
Conclusion
As you’ve probably noticed, I’m bullish on all three stocks. Analysts praise these tech firms highly. Whether we’re talking about Cadence and its multi-faceted AI tailwinds, Datadog and its “land-and-expand” strategy, or First Solar and its leadership in CadTel cells, each firm has the means to run higher.
Analysts see the most upside in DDOG stock (26.5%) of the three. I agree, especially if the firm opts to collaborate rather than acquire firms outright amid rising valuations.
