This year has gotten off to a rocky start, particularly for technology stocks, which are down year to date and have been one of the worst-performing sectors. This is due to several factors, including high valuations, a rotation to more stable and value-oriented stocks, and fears of artificial intelligence (AI) disruption, to name a few.
But when there is volatility in the market, there is also a potential opportunity for long-term investors to find some great technology stocks at a discount.
One growth stock with significant upside potential is Concentrix (CNXC -2.10%). Here's why.
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Concentrix gets an AI boost
Concentrix essentially handles customer services for its clients -- everything from running call centers to providing chatbots to monitoring social media to lending back-office support.
The company beat revenue and earnings expectations in the most recent quarter, with revenue up 4% and adjusted earnings down 9%. The decline in adjusted earnings had to do with several factors.
One, the company moved about 4% of its call centers to offshore locations. This move is designed to reduce expenses long term, but in the short term, there will be costs to "offshoring," which will impact its margins and earnings.
NASDAQ: CNXC
Key Data Points
The second fact is that the company, to nullify the potential for AI disruption, is investing heavily in AI and reducing the amount of "low-complexity" work it does. The fear is that this low-complexity work could be cannibalized by outside AI disruption.
In turn, it is investing heavily in its own AI services and through its IXSuite of products that includes chatbots and virtual assistants for its customers and AI support for their employees. The investments in AI are paying off for Concentrix, as it generated $60 million in AI platform revenue in fiscal 2025 and broke even on its IX suite of products. On the fourth-quarter 2025 earnings call, Concentrix president and CEO Christopher Caldwell said the AI platform will become accretive to earnings this year.
Concentrix stock is too cheap to ignore
Concentrix has a plan to take advantage of AI rather than be disrupted by it, and it has been efficient about it. Last fiscal year, it generated a record $807 million in operating cash flow and $626 million in free cash flow. It anticipates modest increases in revenue, earnings, and free cash flow in fiscal 2026.
Beyond that, analysts see earnings accelerating by roughly 9% in the next fiscal year, as Concentrix starts to generate profits on its AI products.
What really stands out about Concentrix is just how under the radar it is. It is trading at just 10 times earnings and only 4 times forward earnings, with a low 0.39 five-year PEG ratio.
With this kind of cash flow and its success at monetizing AI, it looks too cheap to pass up.
Wall Street analysts see big upside, with a median price target of $57 per share, which suggests a 70% return over the next 12 months. It will be interesting to check back with this stock in a year and see how it did.
