Tech stocks are surging again, largely due to the AI fever that has been gripping Wall Street. While some names, such as Nvidia, are grabbing the headlines, other semiconductor stocks are flying under the radar. Two in particular are poised to give the big boys a run for their money.
ASML
ASML is currently the only company in the world that manufactures the extreme ultraviolet lithography (EUV) machines required to make the most advanced chips on the market. It only sells about 100 of these cutting-edge machines per quarter, making its business highly cyclical. But with an operating margin of 26%, profits are expected to soar as generative AI drives more and more chip companies to get onboard. ASML’s stock is up more than 400% over the past five years, and there is still plenty of room to grow. Now may be the right time to buy in, while the company is not yet a well-known brand.
Arm Holdings
Arm went public in September and has been doing extremely well ever since. Rather than selling its chips to end users, the company actually has licensing deals with big names such as Nvidia and Apple. Its products, known for the power efficiency that is so vital for AI applications, are being used in everything from AI data centers to smartphones.
It’s still too early to know what to expect in the long run, but the company has set its sights high, aiming to capture 50% of the PC market over the next five years. Microsoft recently committed to support Arm-based chips, and both Dell and Asus will soon release devices featuring Arm chips. So the company’s bold predictions may not be far off. If you’re ready to take a risk on an up-and-coming tech stock, this is definitely one to consider.
Neither Lisa Fritscher nor Stocks.News has positions in any of the stocks mentioned in this article. Please see our disclosure page for more information.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...