We recently published a list of Billionaire Ken Fisher’s 10 Favorite AI Stocks for the Rest of 2024. Since ASML Holding NV (NASDAQ:ASML) ranks 9th on the list, it deserves a deeper look.
Billionaire Ken Fisher regularly shares his investing wisdom on his YouTube channel, sharing market insights and lessons he’s learned over the decades. Commenting about the Fed’s rate cut, Fisher recently advised investors not to focus on what the central bank is doing and instead pay attention to long-term investing.
“The fact is, and I’ve said this for a long time, I won’t live forever, but I hope to live a long time and keep saying it: central bankers are crazy. Throughout my life, central banks have operated on flawed ideas and groupthink, which is an inefficient way to manage markets.”
Fisher gave an example of how you could end up losing money following the herd mentality when it comes to central bank moves.
“If you had followed the common belief that when the Fed and other central banks hike rates, you should get out of stocks, that would have worked for a couple of months in 2022. By the middle of the summer of 2022, during the height of rate hikes, you would have been on the wrong side of the market. From June 2022 onward, as the Fed hiked rates by 75 basis points nearly every month, the market was just a few months away from rising, leading to the bull market we’re in now, in 2024.
The basic belief that central bank hikes are bad for stocks was wrong from the start because it was already priced in. As soon as central bank hikes were visible, the market had already accounted for them. We saw a bull market begin in October 2022, which has continued despite repeated rate hikes.”
For this article, we scanned Ken Fisher’s hedge fund’s Q2 holdings and picked its top AI investments. We have analyzed the AI-related growth catalysts for each stock. Why are we interested in 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).
A technician in a clean room working on a semiconductor device, illuminated by the machines.
ASML Holding NV (NASDAQ:ASML)
Billionaire Ken Fisher’s Stake: $3,226,042,315
ASML Holding NV (NASDAQ:ASML) has a near monopoly in the semiconductor industry as its machines are used by chip manufacturers to make physical chips. The company’s focus on maintaining leadership in lithography is evident from its increased R&D expenses of €4.16 billion (+13.3% sequentially, +112.2% from FY2019) and a rising R&D-to-revenue ratio of 16.3%.
ASML Holding NV (NASDAQ:ASML) supplies ultraviolet lithography photolithography machines used to manufacture advanced 3nm and 5nm chips. Jim Kelleher of Argus has set a $1,000 price target on the stock.
ASML was one of the stocks pitched during the SOHN Conference this year. Vijay Shilpiekandula of Dilation Capital, who was named the Sohn Idea Contest Winner, presented ASML as his best stock idea.
“What I find like good opportunity for investors in the market to think about right now is to be creative about the long-term capacities and the long-term earnings potential of this company based on this gold rush that all these memory makers and large language models are chasing,” Shilpiekandula said.
During the second quarter, the company’s revenue rose about 18% quarter over quarter. The company plans to expand production capacity by over 50% by 2025/2026, enhancing its ability to monetize both its existing installed base and new deliveries. The company has a backlog of €39 billion and counting. With projected top- and bottom-line growth rates of 13.3% and 20.3% CAGR through FY2026, compared to initial estimates of 11% and 18.4%, the stock looks positioned to benefit in the future.
Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
Overall, ASML Holding NV (NASDAQ:ASML) ranks 9th on Insider Monkey’s list titled Billionaire Ken Fisher’s 10 Favorite AI Stocks for the Rest of 2024. While we acknowledge the potential of ASML Holding NV (NASDAQ:ASML), 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 ASML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
