We recently published a list of the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts. In this article, we are going to take a look at where Onto Innovation Inc. (NYSE:ONTO) stands against other best semiconductor equipment stocks to buy according to analysts.
As per Straits Research, the US semiconductor manufacturing equipment market size was pegged at US$13.2 billion in 2024. It is expected to grow from US$13.5 billion in 2025 to US$16.5 billion by 2033. This growth is expected to stem from increasing investments in domestic semiconductor manufacturing and the higher demand for advanced semiconductors in critical sectors, including artificial intelligence (AI), 5G, and EVs.
Market Drivers for Semiconductor Manufacturing Equipment
Straits Research highlighted that the resurgence of semiconductor manufacturing in the US is aided by the government initiatives. The federal push is targeted at reducing the dependency on Asian imports as well as strengthening the domestic supply chains. Leading companies continue to establish new fabs in the US, which helps create demand for advanced wafer manufacturing and fabrication equipment. Overall, the increased requirement for high-performance chips in sectors including defense, telecommunications, and automotive further cements the growth of semiconductor equipment.
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Growth Opportunities for Semiconductor Equipment
The rapid adoption of AI and 5G technologies in the United States continues to present strong opportunities for the broader semiconductor manufacturing equipment market, highlighted Straits Research. AI chips, primarily the ones utilized in data centers and autonomous vehicles, need advanced manufacturing techniques, fueling demand for cutting-edge equipment. Furthermore, the launch of 5G networks has been driving rapid production of semiconductors, which are capable of handling higher data transmission rates, further enhancing the need for advanced fabrication technology. The US is well-placed as a leader in AI and 5G development, with leading companies driving innovation, demonstrating strong growth potential.
KPMG believes that Al is now the most important application fueling semiconductor companies’ revenue as businesses continue to incorporate the technology in their digital transformations. As a result, the spending on Al semiconductors is projected to be $174 billion in 2025, which is expected to increase to $280 billion in 2028. KPMG also highlighted that semiconductor leaders opine that Al enablers (which include high-bandwidth memory) are the production technology that can have an impact on the broader industry over the upcoming 3 years. In an era in which Al applications are present in all the industries – ranging from autonomous vehicles to healthcare diagnostics, household devices to personalized recommendations—there remains a higher demand for semiconductors aiding Al capabilities.
Our Methodology
To list the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts, we used a screener to shortlist the companies catering to the broader semiconductor equipment market. Next, we filtered out the stocks that analysts see significant upside to. The stocks are arranged in ascending order of their average upside potential, as of April 9. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician observing a macro defect inspection process, the precision of the company’s systems.
Onto Innovation Inc. (NYSE:ONTO)
Average Upside Potential: ~102.7%
Number of Hedge Fund Holders: 50
Onto Innovation Inc. (NYSE:ONTO) is a leading player in the broader semiconductor industry as it specializes in design, manufacturing, development, and support of metrology as well as inspection tools critical for the semiconductor device fabrication. Stifel analysts maintained a “Buy” rating on the company’s stock, with the firm expecting growth in 2025 to be mainly aided by its wafer fabrication equipment (WFE)-oriented advanced nodes business. This business continues to gain traction in terms of customer, market, and product momentum.
The firm’s analysts believe that Onto Innovation Inc. (NYSE:ONTO) will outperform the overall industry growth in 2025, thanks to the strategies to penetrate new market opportunities as well as defend the existing positions. Overall, the growth in the semiconductor equipment market continues to fuel demand for Onto Innovation Inc. (NYSE:ONTO)’s advanced metrology, inspection, and lithography tools, with chipmakers continuing to adopt complex manufacturing processes and enhance the global fab capacity. Furthermore, dynamic trends, including AI and specialty semiconductors, have been enhancing its total addressable market.
Invesco Distributors, Inc., an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Onto Innovation Inc. (NYSE:ONTO): The company is a semiconductor capital equipment manufacturer that provides process control solutions for microelectronics manufacturing, including defect inspection, metrology systems and software to enhance yield and reduce costs. The company has benefited from the artificial intelligence (AI) boom, but weakness during the quarter provided an attractive entry point for the fund.”
Overall, ONTO ranks 1st on our list of best semiconductor equipment stocks to buy according to analysts. While we acknowledge the potential of ONTO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than ONTO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
