1 Cheap Tech Stock to Buy Right Now

Key Points

• Kyndryl spun off from IBM four years ago and has built a thriving infrastructure services business that Wall Street largely ignores.

• Despite growing its order book by 43% in the latest earnings report, Kyndryl trades at just 0.5 times sales and 9.6 times forward earnings.

• While not cheap by every metric, this stock checks enough value boxes to merit serious consideration.

• 10 stocks we like better than Kyndryl ›

You can define a "cheap stock" in many ways. Sometimes, it's a stock trading at low valuation ratios. Compared to what? Well, that's up for debate -- options include the stock's historical ratios, the average valuation of industry peers, or broadly accepted standards of cheapness. The stock may also simply have taken a drastic price cut recently, executed a successful turnaround of struggling operations, or entered a brand-new market with incredibly lucrative growth prospects.

I could go on, but you get my drift. Different investors have different standards for "affordable stocks," and there are no right or wrong definitions.

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And sometimes, you run across an idea that combines several of these "affordable" qualities. It may not be a clean sweep, falling short of a few important targets, but I'm still talking about a rare find. A company and stock that checks most of the boxes on my affordability checklist is certainly worth a second look, maybe more.

Today, that's how I feel about Kyndryl (NYSE: KD). Since spinning off from IBM (NYSE: IBM) four years ago, Big Blue's former infrastructure services division has built a fantastic business on its own -- and Wall Street is largely missing out on it.

What's in a name?

Kyndryl's company name might discourage some investors. Unlike IBM's straightforward identity as International Business Machines, Kyndryl made up a new word from two unrelated English terms. The parts don't even share a heritage: "Kin" is an Old English word with purely Germanic roots, while the "-dril" fragment comes from "tendril." That's originally Latin via borrowings from French.

For more linguistic analysis, I recommend Duolingo. That's another great investment but hardly a cheap stock. And it gets me thinking about stuff like the deeper linguistic roots of "Kyndryl."

But after exploring the mixed origin of Kyndryl's name, the whole thing makes perfect sense. It's about forming relationships with other humans, which is what Kyndryl does best. Whether your enterprise-class business needs to scale up a new artificial intelligence (AI) system or your smaller family business is looking for cloud-based data security, Kyndryl can help.

Image source: Getty Images.

How Kyndryl rides the AI boom

As it turns out, there's robust demand for Kyndryl's type of services these days. Imagine that -- strong sales of information technology infrastructure services in the middle of a global AI boom!

The company's focus on multiyear service contracts makes it difficult to see what's going on sometimes. Instead of pocketing big payments right away, Kyndryl's contract signings result in richer revenue flows over time.

That being said, Kyndryl is obviously doing great nowadays. In August's report of first-quarter fiscal year 2026, revenues were almost exactly flat year over year, but the book of long-term orders grew by 43%. And the orders are often related to AI services. Revenues from hyperscale data center owners, such as Amazon Web Services and Microsoft Azure, increased 86% year over year.

The next time one of the leading AI platforms unveils a new billion-dollar business, you can bet that Kyndryl had a hand in setting the whole thing up. It may also be involved in maintenance and troubleshooting over time.

Wall Street is sleeping on this one

So, Kyndryl is quietly building a lucrative AI support business. But Wall Street isn't paying attention.

The stock is down 5% year to date as of Sept. 11. Check!

Kyndryl's shares trade at the bargain-bin valuation of 0.5 times sales and 9.6 times forward earnings estimates. Check, check!

It's not an absolutely perfect picture, of course. Those unicorns are even rarer. The multiyear conversion of contracts into revenues is a downside. Kyndryl's stock is less affordable from a couple of specific perspectives, trading at 31.5 times free cash flow and 6.1 times its book value.

Still, Kyndryl checks off too many valuable boxes to be ignored. It deserves some of your attention, even if you're not quite ready to put real money in its stock yet.

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Anders Bylund has positions in Amazon, Duolingo, and International Business Machines. The Motley Fool has positions in and recommends Amazon, International Business Machines, Kyndryl, and Microsoft. The Motley Fool recommends Duolingo and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.