If you're hunting for cheap tech stocks, you might be tempted to bottom-fish among the wreckage of last year's highflyers. But you should resist that urge.
Instead, take a closer look at two companies that aren't broken; they're just out of favor. One is helping enterprises modernize mission-critical IT infrastructure at a time when cloud and artificial intelligence (AI) adoption are accelerating. The other has built a sticky, gamified platform with nearly 130 million engaged users and strong profits (perhaps too strong for some investors, even).
For some reason, neither stock is getting much love on Wall Street right now. Both deserve a closer look.
NASDAQ: DUOL
Key Data Points
Duolingo's green owl is perched on a gold mine
If Duolingo (DUOL 3.79%) were a video-streaming service, it'd be a big one. It would also be a surprisingly profitable one.
With 128 million monthly active users (MAUs) in November's Q3 2025 report, Duolingo's language-learning platform is comparable to 100 million MAUs for Fox's (FOX 0.55%) Tubi and 145 million members of the Roku (ROKU 6.33%) Channel. Those are the two top names in free, ad-supported video streaming.
I'm comparing Duolingo to the media-streaming industry to highlight the massive opportunity that lies ahead.
The company's large user base chiefly uses the ad-supported, free version of Duolingo. Only 11.5 million people have moved up to the two subscription plans, Duolingo Super or Duolingo Max. Ad-based online services carry notoriously slim profit margins, and often lose money in their quest for optimal user growth.
Image source: Getty Images.
But Duolingo is turning serious profits even with this ad-heavy user group. After backing out a one-time tax benefit from Q3's net income, Duolingo showed $70 million of adjusted bottom-line profits on $272 million in revenue. Free cash flow was even richer, landing at $77.4 million.
The results were so strong, management said they would prioritize user growth over profits for a while. 2026 will see course upgrades like high school-level math and better AI-powered video calls for beginners in nine popular languages. The chess course added player-vs-player action last month. These improvements may not be cheap to develop and maintain, but they should give Duolingo's users a better experience.
Management is betting that a better product sells itself. The "free" part of word-of-mouth growth just costs years of development upfront.
So Duolingo's stock plunged on this strategy shift. As of this writing on Jan. 20, the stock has fallen 57% in the past six months. It trades at just 20 times free cash flow and 7.2 times sales. In other words, Duolingo's stock was dumped in Wall Street's bargain bin for the not-so-heinous crime of building a better user experience instead of maximizing short-term profits.
That's a buying signal in my book, no matter the language.
NYSE: KD
Key Data Points
Kyndryl is the AI pick no one's talking about
Kyndryl (KD 0.79%) is nobody's idea of a sexy stock. No owl mascot. No gamification. Just a bunch of IT infrastructure nerds helping Fortune 500 companies migrate to the cloud without breaking everything.
It's an IBM spinoff, which sounds like a warning label. But here's what's actually happening: Kyndryl has been dumping low-margin legacy contracts like bad habits and pivoting to higher-value work. The Q2 report in November showed the results. Hyperscaler revenue doubled over the past year. Kyndryl's adjusted EBITDA margin hit 17.2%, up from 14.1% two years earlier.
The company is poised for revenue growth again, tapping into the ongoing AI boom. Paired with that tasty margin expansion, Kyndryl's refreshed top-line growth should inspire more stock-picker interest and higher share prices over time.
The stock? Down 37% in the past six months. Kyndryl shares are trading at rock-bottom multiples, no matter how you slice them:
|
Metric |
Kyndryl's Multiple |
|---|---|
|
Price to earnings (TTM) |
14.4 |
|
6.8 | |
|
Price to sales |
0.4 |
|
Price to earnings to growth (PEG) |
0.12 |
Data gathered from Finviz.com on Jan. 20, 2026. TTM = trailing 12 months.
These numbers are brutal, unless you're a value investor. Wall Street still treats Kyndryl like yesterday's news. But someone has to do the unglamorous work of actually implementing all those AI and cloud projects enterprises keep announcing.
Kyndryl is that someone. The market just hasn't noticed yet.
