10 Best Mid Cap Tech Stocks to Buy Now

Page 9 of 9

1. Onto Innovation Inc. (NASDAQ:ONTO)

Upside Potential: 85.87%

Market Capitalization: $6.60 Billion

Number of Hedge Fund Holders: 50

Onto Innovation Inc. (NASDAQ:ONTO) makes money by selling advanced tools and software to companies that make semiconductors. The company makes machines that help semiconductor companies test, design, and improve their semiconductors. Onto Innovation Inc. (NASDAQ:ONTO) also provides software that helps clients improve their production processes and make sense of data. Additionally, it provides continuous maintenance and updates for the machines and software it sells.

The company’s revenue has grown at a pace of over 15% annually over the last five years. The company is also highly profitable. During the same period, the company’s net margin expanded from 5.6% to 20.4%. The company expects margins to expand further.

The company’s key growth drivers for the previous fiscal year included AI packaging, advanced packaging, and power devices. It saw significant demand for inspection tools, especially in 2.5D Logic (a packaging methodology for semiconductors) and HBM (high bandwidth memory) processes. Both areas are seeing increased demand as semiconductor needs for AI are burgeoning. Onto Innovation Inc. (NASDAQ:ONTO) is also likely to benefit from TSMC’s planned increase in CapEx for advanced packaging. The company expects increased demand for process control equipment as customers ramp up capacity for advanced packaging.

While we acknowledge the growth potential of ONTO, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ONTO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. 

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.

Page 9 of 9