The NVIDIA Corporation (NASDAQ: NVDA) share price has done remarkably well in 2023 to date, rising by around 180%. Wow. But perhaps a few ASX tech stocks could be better choices.
Yes, there has been a tech rally in the US with the Betashares Nasdaq 100 ETF (ASX: NDQ) up by 37.75%. Nvidia has rallied much more strongly.
Not only is it benefiting from a renewed enthusiasm for technology businesses, but investors are loving the exposure that Nvidia gives to the growth of artificial intelligence.
Nvidia may well turn out to be a big winner in continued AI development and usage. However, not everyone is convinced. Fund manager Naos recently noted a comment from CEO of Block Inc (ASX: SQ2) Jack Dorsey:
I think there's a ton of [AI] hype right now, and I think there's a lot of companies being started that are going to fail because of that hype. I think the technology industry is very trendy and very fashionable and jumps from one thing to the next, the next, the next.
Let's look at three ASX tech stocks that could stick around and may be better value.
Altium Limited (ASX: ALU)
Altium could be one of the ASX's leading technology businesses. It develops electronic PCB design software and also has a few other segments relating to electronics, including Octopart. This business segment offers a search engine for electrical parts.
The company is steadily moving its client base onto its cloud offering, Altium 365. This platform allows engineers to collaborate and also connect with other parts of Altium's ecosystem.
The ASX tech stock is expecting both its revenue and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin to rise in the coming years, which could drive the Altium share price and dividend higher.
According to Commsec, it's valued at 61 times FY23's estimated earnings. That's not exactly cheap, but it doesn't come with the global hype of Nvidia that we've seen this year.
Siteminder Ltd (ASX: SDR)
This company claims to be the world's leading open hotel commerce platform, offering hotels access to online commerce. It works with tens of thousands of hotels across multiple countries, to sell, market, manage, and grow their businesses.
Siteminder has a market capitalisation of A$866 million according to the ASX, so it's less than a hundredth the size of Nvidia.
The business is growing very quickly, thanks partly to a rebound in travel demand. In the three months to 31 March 2023, it saw revenue growth of 28.75%. It is expecting to be free cash flow neutral by the fourth quarter of FY24 on a quarterly basis, thanks to revenue growth and cost initiatives.
It's investing so that it can keep growing at a fast rate. The ASX tech stock is currently targeting a pre-COVID revenue growth rate (which was at 31% between FY17 to FY19).
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is a technology investment company that invests between $5 million to $20 million in tech sector businesses. It targets enterprises run by founders that have a "proven business model with attractive unit economics". It also looks for international revenue generation, "huge market opportunities", and businesses that have the ability to generate repeat revenue.
A key element that Bailador seeks in its investments is 'capital efficient growth'. This means businesses that can grow in size and become profitable with less capital needs. They deliver a "better return on investment" than less capital-efficient businesses, Bailador says.
The businesses within the company's portfolio are typically growing revenue at a fast pace and moving towards profitability.
Bailador had a pre-tax net tangible asset (NTA) of $1.56 per share at 30 April 2023 so, at present, the ASX tech stock is priced at a 30% discount to this.
