In this article, we will be taking a look at the 10 Best Automation Stocks to Buy Now.
2023 was the year of generative AI, mainly because of the widespread adoption of ChatGPT and the resulting response that followed. Now, 2024 is the year in which companies have truly started using this ever-evolving technology. McKinsey revealed that AI supported the companies in both aspects: cost decreases and revenue jumps.
Automation Technologies- Key Trends
In 2024, the integration of automation technologies continues to revolutionize every aspect of supply chain management. This led to unprecedented levels of efficiency and agility. The global integrated automated supply chain is expected to reach US$25.6 billion by 2033, from US$13.4 billion in 2023, according to industry data by Market.us.
From removing warehousing bottlenecks to inventory management and demand forecasting, supply chain automation reshaped traditional practices and redefined the dynamics of the logistics industry. In inventory tracking, advanced warehouse management systems, which are powered by AI and ML algorithms, focus on optimizing inventory placement, route planning, resource allocation, etc.
Inventory tracking and management are being revolutionized through the usage of automation solutions, such as RFID tagging, barcode scanning, and computer vision. Real-time tracking technologies are offering granular visibility in inventory movements. This allows businesses to monitor stock levels, spot discrepancies, and manage understocking/overstocking. Manufacturers are now getting inclined towards smart factories.
Smart factories reflect and demonstrate Industry 4.0 principles. They tend to leverage 5G, IoT, AI, and other advanced technologies. Experts believe that smart factories allow predictive maintenance and decision-making.
Adoption of Advanced Automation
A new theme is emerging in the field of automation, which is automated decision-making. Its adoption rapidly expanded beyond traditional sectors such as manufacturing and logistics. Demand for decision intelligence stems from data-driven and well-informed decision-making requirements which enhances corporate competitiveness and efficiency.
Automated decision-making is now being accepted by critical domains including healthcare and finance. In healthcare, automation supplements the clinical decision-making processes, improves patient-care delivery, and manages resource allocation. It involves leveraging AI and ML algorithms to assess patient data, medical images, and genomic sequences, and customize patient care.
Likewise, in finance, automated systems continue to reshape top-notch operations like risk assessment, fraud detection, and investment management. AI algorithms assess large datasets of financial transactions and market trends to optimize investment strategies. In 2024, the software development industry is all set to embark on a remarkable transformation with cutting-edge innovations.
Quantum Computing and Robotics
The latest technologies in software that are expected to reshape the landscape include quantum computing, virtual reality (VR), augmented reality (AR), big data, data analytics, 5G technology, robotics, etc.
Quantum computing continues to rapidly advance, evolve, and reshape scientific and industrial landscapes. Unlike classical computers—which use bits as the smallest information unit—quantum computers make use of qubits. These exploit quantum mechanics principles to perform complex and difficult calculations. For example, at the time of drug discovery, quantum algorithms simulate molecular interactions in a more accurate and refined way as compared to traditional methods. The integration of quantum computing with AI is another critical emerging trend.
The unprecedented advancements in robotics and AI are expected to bring revolutionary positive transformations. More and more sectors continue to understand the benefits of adopting robotics and AI. Globally, the robotics market should achieve healthy revenue growth, with a projected value of US$38.24 billion this year. The strongest segment in the robotics market is expected to be service robotics, which should lead in market volume. Service robotics find its application in sectors, like Healthcare, Medical, Military and Defense, Logistics, etc. while industrial robots are used in Automotive, Electronics, Food & Beverage, etc.
The trends driving the robotics market are supported by developments in emerging technologies. These include 5G, AI, Edge Computing, IIoT, cloud, open-source, etc. Since AI in robotics continues to evolve, more and more industries are exploiting the latest technologies. Therefore, manufacturers are making data-driven decisions. Some industries use self-learning robots to execute work processes.
Smart factories are using AI-enabled robotics to execute smarter, reliable, and efficient processes. They help in production optimization. AI-powered robotic technologies, which include computer vision and tactile sensing, are utilized to help automate certain tasks. For example, reinforcement learning is used for better industrial assembly. The adoption of robotics, smart automation, and high-tech manufacturing will help workers with manual labor and reduce repetitive tasks.
A robotic process automation system in a modern datacenter.
Our methodology
We used automation and robotics ETFs plus online rankings to compile an initial list of the best automation stocks to buy now. We narrowed our list to the 10 stocks that analysts see the most upside to. The list is sorted in ascending order of analysts’ average upside potential, as of August 11.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Automation Stocks to Buy Now
10) Analog Devices, Inc. (NASDAQ:ADI)
Average Upside Potential: 23.04%
Analog Devices, Inc. (NASDAQ:ADI) is a leading analog, mixed-signal, and digital signal processing chipmaker. It has a significant market share in converter chips. These are used to translate analog signals to digital and vice versa. The company is a specialist in analog chips (sensors). These sensors interact with physical-world signals just like electricity or sound waves.
The company released its fiscal 2Q 2024 results, with revenue coming at $2.16 billion. This number was above the midpoint of its outlook. Analog Devices, Inc. (NASDAQ:ADI) achieved profitability and EPS above high-end of the outlook mainly because of the resiliency of its business model and disciplined cost control. Since there is inventory rationalization throughout its customer base, the company expects to return to sequential growth in 3Q 2024.
The company’s products serve the needs of high-growth trends, such as automotive electrification and advanced driver assistance systems, factory intelligence/automation, etc. These factors are expected to support the company in being free cash flow positive for the next several years.
Artificial intelligence is an area where Analog Devices, Inc. (NASDAQ:ADI) has been increasing investments and the company is quite optimistic about its applications. AI is expected to accelerate high-growth trends from centralized applications in data centers to applications at physical edge.
The stock of Analog Devices, Inc. (NASDAQ:ADI) has had a tough ride in the recent past mainly because of weak demand from customers and distributors. However, Wall Street analysts opine that this trend seems to be bottoming and the investors have once again regained their confidence in the industry’s secular demand characteristics.
Analysts at JPMorgan Chase & Co. covered the shares of Analog Devices, Inc. (NASDAQ:ADI) and boosted their price objective from $220.00 to $260.00. They gave the stock an “Overweight” rating on 23rd May 2024. As of the first quarter, the stock is held by 65 hedge funds with total stakes worth $4.37 billion.
Artisan Partners, an investment management company, released second quarter 2024 investor letter and mentioned about Analog Devices, Inc. (NASDAQ:ADI). Here is what the fund said:
“Turning to the positive side of the ledger, our top contributors were Analog Devices, Inc. (NASDAQ:ADI), NetApp and Arch Capital Group. Analog Devices (ADI) is the second-largest analog semiconductor chipmaker in the world behind Texas Instruments. Investors are excited about the prospects of a cyclical recovery in semiconductors as ADI’s bookings have turned higher on improving demand and tight inventories. Initially purchased in 2006, ADI is one of our longest held stocks as the company has proven to be an excellent compounder of value due to its leadership position in a secular growth industry, strong balance sheet and cash-generating properties. ADI operates in attractive segments that offer high gross and operating margins and have sticky customers. Producing chips into applications that often have decades of longevity (autos, industrial, communications) and that are a small fraction of the overall cost within the value chain makes this business attractive and hard to displace once designed into the product/application.”
9) Alphabet Inc. (NASDAQ:GOOGL)
Average Upside Potential: 23.95%
Alphabet Inc. (NASDAQ:GOOGL) operates as a holding company. With the help of its subsidiaries, the company offers web-based searches, advertisements, maps, software applications, enterprise solutions, commerce, and hardware products.
UiPath Inc. (NYSE:PATH), which is a leading enterprise automation and AI software company, and Google Cloud announced an expanded partnership to help customers transform their enterprise with AI-powered automation. UiPath is now available on Google Cloud Marketplace. Therefore, Google Cloud customers can purchase UiPath Business Automation Platform. This will help them reliably deploy and scale automation initiatives on Google Cloud infrastructure.
Google Cloud’s expanding partnership with UiPath Inc. (NYSE:PATH) should create new opportunities for businesses as they will be able to streamline thousands of processes with AI and automation. These businesses will save costs and unlock new innovation.
The company has released its 2Q 2024 financial results, with total revenues coming at $84.7 billion. Of this, more than ~75% was contributed from advertising on Google Search and its other channels. As of now, investors are in a dicey situation as to what should be the next course of action after the recent Antitrust Defeat. For those who are unaware, Alphabet Inc. (NASDAQ:GOOGL), which is the parent company of Google, lost an antitrust lawsuit in Federal court.
The $20 billion in annual payments to Apple Inc. (NASDAQ:AAPL), made by Alphabet Inc. (NASDAQ:GOOGL), for making Google the default search engine made the critical part of the case. The judge provided a ruling, wherein, he said that Alphabet Inc. (NASDAQ:GOOGL) illegally stifled competition in its online search market.
Even though this ruling is a major setback for the company, it should be noted that Alphabet Inc. (NASDAQ: GOOGL) pays billions of dollars to several other companies. These are made to make Google Search the default search engine. Since the tech giant will not pay anymore, this can help the company save billions of dollars per year. Even though it is believed that the appeals process will take several years, Google’s search market share should not reduce quickly. Apart from this, the company has included artificial intelligence features in Google. Because of this, it has collected massive amounts of user data. In 2Q 2024, the company’s capital spending went up by 91% to reach $13.18 billion. The company is playing the long game when it comes to incorporating Al-powered technologies.
Analysts at Truist Financial upped their price objective on shares of Alphabet Inc. (NASDAQ:GOOGL) from $190.00 to $196.00. They have a “Buy” rating on 24th July.
According to Insider Monkey’s 1Q 2024, Alphabet Inc. (NASDAQ:GOOGL) was part of 222 hedge fund portfolios, compared to 214 in the last quarter.
Patient Capital Management, a value investing firm, released its 2Q 2024 investor letter and mentioned Alphabet Inc. (NASDAQ:GOOGL). Here is what the fund said:
“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”
8) Applied Materials, Inc. (NASDAQ:AMAT)
Average Upside Potential: 25.54%
Applied Materials, Inc. (NASDAQ:AMAT) is the world’s largest supplier of semiconductor manufacturing equipment. It offers materials engineering solutions, which help in making nearly every chip. The company’s Applied Global Services® (AGS) segment provides integrated solutions, which are focused on optimizing equipment and fab performance and productivity, including spares, upgrades, remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products. Its SmartFactory® automation software portfolio helps in streamlining all the aspects of a factory (such as processes, equipment and people to provide competitive advantage.
The strong revival in chip demand throughout end-use sectors is expected to support the broader automation industry. These end-use sectors include consumer electronics and automotive, higher adoption of advanced technologies including Al, Internet of Things, robotics, etc.
With this, Applied Materials, Inc. (NASDAQ:AMAT) is well-placed to benefit from the increased demand for its products. This is because the company has the most promising portfolio of materials engineering technologies for chips that underpin tectonic shifts in technology such as AI, IoT, EVs, and clean energy. Therefore, these long-term secular trends are expected to act as tailwinds.
The company’s leading-edge tools, primarily for Al chips and high-bandwidth memory, are expected to see a boost over the near future.
In 2Q 2024, the company delivered revenue and earnings, which were towards the high end of its guided range. It generated revenues of $6.65 billion. Its GAAP EPS came in at $2.06 and non-GAAP EPS at $2.09, reflecting a rise of 11% and 5% YoY, respectively.
Because of secular trends, the company has seen significant improvement in its financials. Applied Materials, Inc. (NASDAQ:AMAT) saw its sales rise from over $23 billion in fiscal 2021 to more than $26 billion as of FY23. In 1H 2024, the company’s sales went up by 14% YoY to reach $13.3 billion.
Analysts at Cantor Fitzgerald increased their price objective on shares of Applied Materials, Inc. (NASDAQ:AMAT) from $260.00 to $290.00. They provided an “Overweight rating on 16th July.
According to Insider Monkey’s 1Q 2024 data, 79 hedge funds were long Applied Materials, Inc. (NASDAQ:AMAT). Their stakes were worth $5.9 billion.
7) Lam Research Corporation (NASDAQ:LRCX)
Average Upside Potential: 29.97%
Lam Research Corporation (NASDAQ:LRCX) manufactures, markets, and services semiconductor processing equipment that is used in making integrated circuits. The company’s technology provides dynamic opportunities for businesses to push boundaries of robotics and nanotechnology.
To meet the need for cutting-edge solutions, Lam Research India joined hands with Nikit Engineers, which is a renowned provider of welding automation and robotic solutions in India. The focus of this collaboration is to implement Nikit Engineer’s Orbital Welder, which is a state-of-the-art robotic welding system, to enhance the efficiency of the connector tube welding process.
While the company’s stock was recently hammered, Wall Street analysts believe that this pullback should be considered a buying opportunity as the stock is ready to take off. Lam Research Corporation (NASDAQ:LRCX) released 4Q 2024 revenue of $3.87 billion, beating the analysts’ expectations of $3.82 billion. While its revenues went up by 21% YoY, the company’s non-GAAP earnings per share came in at $8.14. Analysts were expecting $7.58 per share.
The company is expected to benefit from an increase in memory consumption due to the growing adoption of artificial intelligence (Al). Lam Research Corporation (NASDAQ:LRCX) acknowledged seeing an additional demand due to an improvement in high-bandwidth memory (HBM) capacity investments. As per the current trend, data centers are increasingly using HBM to address Al workloads. This is because it can assess and execute enormous amounts of data. All this happens by maintaining low power consumption.
The management of Lam Research Corporation (NASDAQ:LRCX) reaffirmed a strong mid-$90 billion Wafer Fab Equipment (WFE) market outlook for CY24. This, together with management’s confidence in WFE market growth for 2025, mainly in NAND sector, paints a rosy picture for the company’s future performance.
Barclays upped its price target on shares of Lam Research Corporation (NASDAQ:LRCX) from $865.00 to $900.00. They gave an “Equal weight” rating on 5th June. Insider Monkey’s 1Q 2024 data of 920 hedge funds suggested that 78 hedge funds held positions in Lam Research Corporation (NASDAQ:LRCX).
6) QUALCOMM Incorporated (NASDAQ:QCOM)
Average Upside Potential: 30.71%
QUALCOMM Incorporated (NASDAQ:QCOM) carries out operations as a multinational semiconductor and telecommunications equipment company. It is engaged in developing and delivering digital wireless communications products and services.
The Qualcomm Al Engine is the application of computer vision in Al. This optimizes tasks such as object detection, facial recognition, etc. Notably, smartphones, loT devices, automotive systems, and augmented reality (AR) are some of the examples where such technologies are used. QUALCOMM Incorporated (NASDAQ:QCOM) has been exploiting catalysts for shifting its business mix.
This was evident from its announcement about increased progress in automotive and Internet of Things (loT) solutions. The company’s stock is being helped by 2 main factors. Firstly, there have been early signs of recovery in the smartphone market. Secondly, there is increased optimism that the generative Al trend should help increase smartphone sales.
For 4Q 2024, the company expects revenues in the range of $9.5 billion – $10.3 billion and GAAP diluted EPS of $2.38 – $2.58. Wall Street analysts believe that QUALCOMM Incorporated (NASDAQ:QCOM)’s automotive business has seen good momentum, with semiconductors playing a greater role in the transportation industry amidst trends like electrification and autonomous driving.
Analysts at Bank of America initiated the coverage on shares of QUALCOMM Incorporated (NASDAQ:QCOM). The brokerage raised its price objective from $180.00 to $245.00, giving a “Buy” rating on 31st May.
According to Insider Monkey’s data, 78 hedge funds held stakes in QUALCOMM Incorporated (NASDAQ:QCOM) at the end of 1Q 2024.
O’keefe Stevens Advisory, an investment advisory firm, published its second-quarter 2024 investor letter. Here is what the fund said:
“During the quarter, the A.I. rally broadened beyond the obvious players of Nvidia, AMD, and hyperscalers. QUALCOMM Incorporated (NASDAQ:QCOM), a long-standing investment, is gaining recognition for integrating artificial intelligence into mobile phones. Qualcomm’s A.I. on-device capabilities enable real-time language translation, improved voice recognition, and sophisticated imaging techniques as A.I. becomes more integral to mobile experiences. Qualcomm benefits by leading the market in providing robust, efficient, and versatile A.I. solutions. A.I. could be the first technology advancement in several years to accelerate the smartphone replacement cycle as users desire these advanced capabilities.”
5) NVIDIA Corporation (NASDAQ:NVDA)
Average Upside Potential: 33.65%
NVIDIA Corporation (NASDAQ:NVDA) is the top designer of discrete graphics processing units that enhance the experience on computing platforms.
Recently, NVIDIA Corporation (NASDAQ:NVDA) stated that leaders in robot development continue to adopt the NVIDIA Isaac™ robotics platform. This platform finds its application in research, development, and production of the next generation of Al-enabled autonomous machines and robots. BYD Electronics, Siemens, Teradyne Robotics, and Intrinsic, which is an Alphabet Company, are using the NVIDIA Isaac Robotics Platform for autonomous robot arms, humanoids, and mobile robots.
In another development, Rockwell Automation, Inc. (NYSE:ROK) plans to use NVIDIA Corporation (NASDAQ:NVDA)’s artificial intelligence software in autonomous mobile robots. Rockwell Automation, Inc. (NYSE:ROK) will integrate NVIDIA Corporation (NASDAQ:NVDA)’s Al robot development platform, dubbed Isaac, in its Otto autonomous mobile robots. This is meant for manufacturing facilities.
Shares of NVIDIA Corporation (NASDAQ:NVDA) saw a decline of over ~18% over the past 1 month. Much of this decline came after reports emerged claiming that the Biden administration might put further restrictions on the exports of semiconductor equipment to Chinese markets. Apart from this, uncertain macroeconomic news (Bank of Japan increasing interest rates, disappointing employment numbers for July, etc.) weighed over broader market sentiments, pressuring NVIDIA Corporation (NASDAQ:NVDA)’s stock. There was also news that the company’s launch of chips, which are based on new Blackwell architecture, might get delayed by ~3 months due to design flaws.
Wall Street analysts believe that this short-term news should not shake the long-term view of the company’s performance. The Biden administration has not put any sort of restrictions up until now.
NVIDIA Corporation (NASDAQ: NVDA) recently announced that it plans to ramp up the production of Blackwell chips in 2H 2024. Experts believe that the company’s current-generation Hopper chips should still sell strongly by 2024 end. By that time, Blackwell chips can become a strong contributor to its sales.
Analysts at Argus upped their target price on the company’s shares from $110.00 to $150.00. They gave a “Buy” rating on 11th June. As per Insider Monkey’s 1Q 2024 data, 186 hedge funds had stakes in NVIDIA Corporation (NASDAQ: NVDA).
Patient Capital Management released its second quarter 2024 investor letter and mentioned NVIDIA Corporation (NASDAQ: NVDA). Here is what the firm said:
“NVIDIA Corporation (NASDAQ:NVDA) continued to lead both the market and the portfolio, remaining a top performer in the period gaining 36.7%. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and free cash flow (“FCF”) an astounding 126%, 392%, and 610%, respectively, over the last year. While we expect competition to increase, we think NVDA can continue to maintain top market share. While many are concerned with backlog times shortening, we think the rollout of the B100, which promises 2.5x better performance for only 25% more cost, later this year will create more shortages. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
4) Broadcom Inc. (NASDAQ:AVGO)
Average Upside Potential: 34.90%
Broadcom Inc. (NASDAQ:AVGO) develops connected devices and Internet infrastructure, ranging from physical optic fiber to antennas, semiconductors, and software. The company remains active across the infrastructural, industrial, and enterprise-level connectivity sectors.
Therefore, it has a presence at every level of IoT, from homes or factories to data centers. Ever since the company has acquired VMware, Broadcom Inc. (NASDAQ:AVGO) solidified its position as the market leader in the hybrid cloud management space. VMware is joining SEW-EURODRIVE, who is the a leader in drive automation solutions, to lead the transition to new era of software-defined manufacturing with SEW-EURODRIVE’s DriveOperations concept. This concept focuses on enhancing operational capabilities, reducing costs, and managing complex tasks more effectively.
The company, known for its diverse technological services and acquisition strategy, expects to see an increase in chip demand, courtesy of the ever-evolving field of generative AI. Given its recent acquisition of VMware, it has strengthened its product offerings. This is true mainly for custom and networking chips, which should see healthy growth because of AI advancements.
Wall Street analysts applauded the dominant position of the company in critical chip markets. These analysts are optimistic about the potential of VMware’s subscription-based growth. The stock of Broadcom Inc. (NASDAQ:AVGO) has seen a run-up of over ~70% in 1 year, thanks to a robust AI growth environment and integration of VMware. The stock now trades at ~24.63x its forward earnings, which is still at a discount to the sectoral average of ~32.2x.
The company released its 2Q 2024 results, where revenues came at $12,487 million, showcasing an increase of ~43% YoY. Its GAAP net income came in at $2,121 million and its non-GAAP net income was $5,394 million. Much of this improvement was driven by AI demand and VMware. The revenue from its AI products was $3.1 billion in 2Q 2024, a record for Broadcom Inc. (NASDAQ:AVGO). The infrastructure software revenue picked up pace as more enterprises adopted the VMware software stack so that they could build their private clouds.
Wells Fargo & Company raised its price objective on the shares of Broadcom Inc. (NASDAQ:AVGO) from $143.00 to $170.00, giving an “Equal-weight” rating on 13th June. It was held by 115 hedge funds in Q1 2024, with total stakes worth $14.7 billion.
Aristotle Atlantic Partners, LLC, an investment advisor, released its second quarter 2024 investor letter. Here is what the fund said:
“Broadcom Inc. (NASDAQ:AVGO) is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. The company strategically focuses its research and development resources to address niche opportunities in target markets and leverage its extensive portfolio of U.S. and other patents and other intellectual property to integrate multiple technologies and create system-on-chip component and software solutions that target growth opportunities. Broadcom designs products and software that deliver high performance and provide mission-critical functionality. The company has a history of innovation in the semiconductor industry and offers thousands of products that are used in end products such as enterprise and data center networking, home connectivity, “set-top boxes broadband access”, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom differentiates itself through its high-performance design and integration capabilities and focuses on developing products for target markets where it believes it can earn attractive margins.
We view Broadcom’s semiconductor business as being very well positioned to benefit from secular growth in data center networking, which is being driven by AI and cloud computing. The company continues to invest in research and development, and we see this as a competitive advantage for the company. Broadcom’s infrastructure software business is a recurring revenue business model that provides mission-critical mainframe support software to its customer base. The recent VMware acquisition will enhance this business strategy and accelerate the growth rate of this business unit, as VMware’s product suite includes key tools for AI server upgrades. Our long-term investment thesis is supported by Broadcom’s success in its strategy of maintaining technology and market share leadership in mission-critical markets with high switching costs and deep profit pools.”
3) ASML Holding N.V. (NASDAQ:ASML)
Average Upside Potential: 39.68%
ASML Holding N.V. (NASDAQ:ASML) is engaged in developing, producing, and marketing manufacturing equipment, mainly machines for the production of chips through lithography. The company has introduced robotic systems which play a critical role in improving semiconductor manufacturing efficiency. It deploys cutting-edge robotic lithography systems in semiconductor fabrication, possessing magnetically levitating wafer tables which accelerate at enormous speeds of 7g without vibration or heating issues. This allows rapid loading, printing, and unloading of wafers.
The company made a breakthrough with the newly launched chip-printing system. This was established in collaboration with a European nanoelectronics organization named imec. ASML Holding N.V. (NASDAQ:ASML) is the only producer of high-end extreme ultraviolet (EUV) systems for manufacturing the smallest and densest chips.
Both companies plan to intensify collaboration over the next phase of developing the state-of-the-art high-numerical aperture (High-NA) extreme ultraviolet lithography pilot line at imec.
As a result of this innovation, Wall Street analysts believe that current levels offer a great entry point. Considering that it trades at ~32.2x forward price-to-earnings and its monopolization of crucial chipmaking technology, the company offers a great bargain. While the company continues to steer through tighter restrictions on exports to Chinese markets, experts opine that expansion of the AI market should offset these problems.
Analysts at Wells Fargo & Company assumed coverage on the shares of ASML Holding N.V. (NASDAQ:ASML) and raised their price objective from $1,150.00 to $1,185.00. They gave an “Overweight” rating on 17th June.
As per Insider Monkey’s database of 920 hedge funds, 75 hedge funds reported owning stakes in ASML Holding N.V. (NASDAQ:ASML).
2) Advanced Micro Devices, Inc. (NASDAQ:AMD)
Average Upside Potential: 41.51%
Advanced Micro Devices, Inc. (NASDAQ:AMD) offers products like microprocessors, embedded microprocessors, graphics, video, and multimedia products. The company supplies it to third-party foundries and offers assembling, testing, and packaging services.
If you are looking to have exposure to varied areas of technology, Advanced Micro Devices, Inc. (NASDAQ:AMD) is the stock. The stock is down by over ~25% in just one month mainly because of the sell-off in the technology sector. Anyways, the stock is now at a level at which value investors cannot afford to ignore.
It released its 2Q 2024 results, wherein, its revenue went up by 9% YoY, crushing the analysts’ expectations by ~$120 million. Its EPS came in at $0.69, beating estimates by $0.01. It saw revenue growth of 115% YoY in the AI-focused data center segment.
Robots and other smart devices are required to process sensor data in the shortest possible time. In a bid to address this demand, the company rolled-out AMD Embedded+. This is a new computing architecture that focuses on combining AMD Ryzen Embedded processors with Versal adaptive systems on chips. This should help original design manufacturers to accelerate time to market as the integrated board is scalable and power-efficient.
Ever since Advanced Micro Devices, Inc. (NASDAQ:AMD) acquired Xilinx, it has witnessed higher AI demand in the areas of industrial/manufacturing, medical/surgical, smart-city infrastructure, etc. Embedded+ will support video codecs and AI inferencing and, due to the combination of Ryzen and Versal, it can allow real-time control of robot arms.
Wells Fargo & Company initiated the coverage on the shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), and raised their target price from $190.00 to $205.00. It gave an “Overweight” rating on 11th July. According to Insider Monkey’s 1Q 2024 data, 124 hedge funds were bullish on the company, compared to 120 funds in the prior quarter.
1) Micron Technology, Inc. (NASDAQ:MU)
Average Upside Potential: 77.27%
Micron Technology, Inc. (NASDAQ:MU) is engaged in manufacturing and marketing dynamic random access memory chips (DRAMs), static random access memory chips (SRAMs), flash memory, and memory modules. The company’s product portfolio of memory and storage technologies helps in creating “smarter” loT devices for different industries. It provides the right memory and storage technologies for industrial loT solutions. Therefore, industrial automation technologies use connected, smart machines so that operational efficiency is improved. Industrial PCs and embedded loT infrastructure solutions use Micron Technology, Inc. (NASDAQ:MU)’s products and internet of things platform level support in order to accelerate time to market.
Since Micron Technology, Inc. (NASDAQ:MU) is a cyclical business, healthy growth prospects of AI systems, rebound in smartphone sales, and demand for computer-packed vehicles should act as tailwinds for the company. Not only these areas, data storage capacities continue to remain elevated mainly because of cloud computing and 5G wireless technologies.
In its fiscal 3Q 2024 results, the company saw 17% sequential revenue growth, outpacing its guidance range. This growth stemmed from strong AI demand and healthy execution. Micron Technology, Inc. (NASDAQ:MU) continues to gain market share in high-margin products such as High Bandwidth Memory (HBM). Its data center SSD revenue touched a record high, reflecting the strength of its AI product portfolio. The strong demand for HBM is expected to strongly contribute to the company’s revenue.
Micron Technology, Inc. (NASDAQ:MU) has several AI-related catalysts beyond HBM, which should help it deliver stronger growth in the current quarter. For example, AI-powered smartphones and PCs might result in higher demand for memory sales. This is because these categories have higher memory content.
Analysts at Robert W. Baird upped their price target on the company’s shares from $150.00 to $172.00. They gave an “Outperform” rating on 24th June. According to Insider Monkey’s 1Q 2024 data, 115 hedge funds were long Micron Technology, Inc. (NASDAQ:MU).
ClearBridge Investments, an investment management company, released its 2Q 2024 investor letter. Here is what the fund said about Micron Technology, Inc. (NASDAQ:MU):
“Stock selection in the IT sector proved to be the largest contributor to performance, particularly driven by the strong performance of Micron Technology, Inc. (NASDAQ:MU) The company, which designs, develops, manufactures and sells memory and storage products, continued its strong performance alongside other AI beneficiaries as the anticipated demand for new and additional storage essential for housing and training large language AI models continues to grow.”
While we acknowledge the potential of Micron Technology, Inc. (NASDAQ:MU) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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