By As almost every investor knows by now, artificial intelligence (AI) has been driving the current bull market since its start in 2023.
The launch of OpenAI’s ChatGPT has set off a new arms race in the industry, and generative AI technology could be as transformative as the internet. While stocks with exposure to artificial intelligence, like the semiconductor sector, have generally done well, some stocks have done better than others.
Nvidia, for example, just set another all-time high on soaring demand for its new Blackwell platform, but not every AI stock has kept up with the Nasdaq Composite, which nearly set an all-time high earlier this week. In fact, ASML (NASDAQ: ASML) is now down 34% from its peak earlier this year after the industry bellwether gave a disappointing forecast in its third-quarter earnings report on Tuesday. The stock fell 16.3% on the news.
As you can see, revenue growth dropped to just 1% in 2022’s Q4, but if you had bought the stock then, you’d be up more than 80% now.
ASML retains a significant competitive advantage as the only producer of EUV lithography machines, and it should eventually benefit from the coming boom in chip production due to AI.
Even with its dialed-down guidance, the company is still calling for 16.1% growth at the midpoint and expects expanding gross margins and operating margins.
As profits recover, the stock looks like a good bet to bounce back now that the weak forecast is priced in. With its unique EUV technology, strong margins, and ramping AI demand, ASML looks like a great bet to be a winner over the long term.
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,285!*
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See 3 “Double Down” stocks »
*Stock Advisor returns as of October 14, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
Down 34%, This AI Stock Is a No-Brainer Buy Stock Right Now was originally published by The Motley Fool
