With the market sitting near all-time highs and some valuations looking stretched, it may seem difficult to find bargain stocks, especially in the tech sector, but that doesn't mean they aren't there. Let's look at two tech stock to scoop up on the cheap.
1. UiPath
With a price-to-sales (P/S) multiple of less than 4.5 times 2026 analyst estimates, for a software-as-a-service (SaaS) company with gross margins above 80%, UiPath's (PATH +1.13%) stock is on the sales rack. However, the company has the potential to be a huge turnaround play over the next few years.
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The company is a leader in robotic process automation (RPA), which uses software bots to help businesses automate repetitive tasks. As artificial intelligence (AI) started to become mainstream, companies initially took a step back to see where the technology was headed and if AI might displace RPA.
However, as AI has evolved and moved toward AI agents, there's been a need for AI agent orchestration. That is where UiPath has pivoted, and its foundation with software bots gives it a leg up in this area.
NYSE: PATH
Key Data Points
The company's platform now allows customers to both build their own AI agents using low-code and no-code tools, as well as coordinate the actions of third-party agents and bots. As more software companies develop AI agents, UiPath is looking to be the platform that can help them coordinate with each other, along with humans and software bots, which can do simple, repetitive tasks much more cheaply than AI.
Meanwhile, the company has recently announced a number of collaborations with the likes of Alphabet, OpenAI, and Nvidia to further strengthen its strategy. One of the most intriguing partnerships, though is with data warehousing and analytics company Snowflake, where its AI orchestration tools can provide customers instant insights using their own data stored with Snowflake.
Even before these partnerships, UiPath was showing signs of a turnaround. Its annual recurring revenue (ARR) rose 11% last quarter, while its net revenue retention stabilized at 108%. Meanwhile, after implementing cost cuts, its operating margins have meaningfully improved. Perhaps most promising, though, is that it said almost all new customers are choosing to use both its RPA and AI products together.
UiPath has the underlying technology to potentially play a big role in the future of agentic AI, making it a solid stock to pick up while it's trading at a bargain price.
2. GitLab
GitLab (GTLB 0.02%) is another high-gross-margin SaaS company trading at bargain-bin levels. The stock carries a forward P/S multiple of under 7 times despite consistently growing its revenue above a 25% clip and having near 90% gross margins.
GitLab is known for its DevSecOps platform, where developers securely write and store code, but the company has been quietly transforming itself into a more comprehensive software lifecycle company.
The main driver of this shift is its Duo Agent solution, which can help software developers use AI to not only assist with coding but also handle everyday tasks to free them up to spend more time coding. Given that developers tend to spend only about 20% of their time writing code, this is a powerful value proposition.
NASDAQ: GTLB
Key Data Points
Meanwhile, perhaps GitLab's biggest potential growth driver is its recent pricing model change. The company will move from a seat-based pricing model to a hybrid seat-plus-usage pricing model. A usage component should help the company benefit more from the increased value its solution is now bringing to the table, while at the same time, it protects it in the event that AI eventually leads to fewer coders. At the moment, though, AI is spurring more software development and more developers signing up for its solutions.
While there have been rumors of the company potentially being acquired, it has a long runway for growth and trades at a cheap valuation, making it a solid stock to hold for the long term.
