Open Text Corporation (OTEX): Among Overlooked Tech Stocks to Buy Now
We recently published a list of . In this article, we are going to take a look at where Open Text Corporation (NASDAQ:OTEX) stands against other overlooked tech stocks to buy now.
After overcoming major macroeconomic challenges, the IT sector has started 2025 with fresh vigor. The tech sector is now ready for a resurgence after a period of instability characterized by high inflation, rising interest rates, and worldwide unpredictability. The sector is expected to be 'healthy' or 'very healthy' in 2025, according to 62% of tech executives polled by Deloitte. Global IT spending is expected to increase by 9.3%, driven mostly by double-digit growth in software and data center investments. As companies move AI initiatives from pilot projects to full-scale production deployments, analysts anticipate that generative AI, cybersecurity, and cloud services will continue to be important growth drivers.
The rate of layoffs dropped significantly in 2024, indicating growing stability. But new difficulties have surfaced, especially in relation to geopolitical tensions and regulatory barriers. The world economy is already feeling the effects of President Trump's expansive tariff plans, which include additional charges on major tech manufacturing countries like Taiwan, India, and Vietnam that range from 26% to 49%. Although imports of semiconductors, which are essential for the development of AI, have been temporarily exempted, tech companies that rely on international supply chains face new risks as a result of the unstable trade policy climate.
Meanwhile, generative AI is proving to be a double-edged sword. While it is projected to contribute 21% to U.S. GDP by 2030, as reported by the World Economic Forum, there are growing concerns about the technology displacing millions of jobs, particularly administrative roles. As the World Economic Forum highlights, the solution lies not in halting AI innovation but fostering 'Authentic Intelligence'—an approach emphasizing the collaboration of human critical thinking with AI's capabilities to ensure inclusive economic growth.
Additionally, cybersecurity has become a significant priority on the strategic agenda. As the use of AI increases, so does the attack surface available to hackers. By 2028, it's expected that global spending on cybersecurity will exceed $200 billion, as businesses emphasize bolstering their defenses. However, only 24% of existing gen AI projects are thought to be sufficiently secure, indicating that trust is still a major obstacle to the widespread use of AI.
In summary, despite the fact that 2025 holds great promise for the IT industry due to advancements in generative AI, cloud migration, and robust IT investment, businesses still have to deal with a complex web of ethical, geopolitical, and legal issues. Successful companies will strike a balance between daring technological innovation, careful risk management, strategic supply chain diversity, and a dedication to upholding stakeholder and customer confidence.
Against this dynamic backdrop, let's look at 10 Overlooked Tech Stocks to Buy Now, which are not only ready to capitalize on upcoming opportunities but may also provide attractive upside potential for investors seeking beyond the conventional mega-cap giants.
To find overlooked tech stocks, we started by looking for companies with a market capitalization greater than $5 billion, ensuring a concentration on financially strong, large-cap enterprises. We chose stocks from this category that had a price-to-earnings (P/E) ratio of less than 15, using the P/E ratio as a conventional valuation indicator to highlight relatively affordable earnings-driven stocks. We then evaluated these firms based on hedge fund sentiment, utilizing data from Insider Monkey's fourth quarter 2024 report. Finally, we chose the ten companies with the least number of hedge fund investors to represent our list of Overlooked Tech Stocks to Buy Now.
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).
A close-up of a cyber security hardware device used for protection.
P/E Ratio: 6.4
Hedge Fund Holders: 14
Open Text Corporation (NASDAQ:OTEX) is a major provider of information management and cybersecurity solutions to global enterprise clients. Headquartered in Waterloo, Canada, the company's diverse portfolio includes content management, AI-powered analytics, cybersecurity, cloud services, and supply chain automation, with over 120,000 customers worldwide.
Open Text Corporation (NASDAQ:OTEX) reported $1.33 billion in revenue and $501.5 million in adjusted EBITDA in fiscal Q2 2025, for a margin of 37.6%. Free cash flow totaled $307 million, and the company completed the quarter with $1.12 billion of cash. The company returned $258 million to shareholders through share repurchases and increased its fiscal 2025 share buyback authorization by $150 million, bringing it to $450 million. Cloud revenues increased 2.7% year-over-year, driven by a record $250 million in new cloud contract bookings.
Open Text Corporation (NASDAQ:OTEX) expanded its cybersecurity solution by launching Core Threat Detection and Response on February 20, 2025. The new AI-powered technology, which integrates with Microsoft Azure and Security Copilot, improves threat detection across hybrid cloud settings.
The Cybersecurity Cloud now serves more than 7,500 enterprise clients, establishing Open Text Corporation (NASDAQ:OTEX) as a market leader in next-generation security solutions.
Management confirmed its fiscal 2025 free cash flow projection of $600 to $650 million, while marginally decreasing sales expectations to $5.175 billion to $5.27 billion. Importantly, Open Text Corporation (NASDAQ:OTEX) anticipates a return to total revenue growth in Q4, led by cloud, security, and AI projects based on its Titanium X platform.
With strong momentum in its cloud and cybersecurity businesses, aggressive capital returns, and improved operational efficiency, Open Text Corporation (NASDAQ:OTEX) is developing as an overlooked tech stock with the ability to deliver long-term shareholder value.
Overall, OTEX ranks 2nd on our list of overlooked tech stocks to buy now. While we acknowledge the potential of OTEX, our conviction lies in the belief that certain 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 OTEX 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.
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