We recently compiled a list of the 10 Buzzing AI Stocks According to Goldman Sachs. In this article, we are going to take a look at where KLA Corporation (NASDAQ:KLAC) stands against the other buzzing AI stocks.
The Goldman Sachs Communacopia + Technology Conference 2024, held earlier this month, brought several significant updates on the technology sector for investors, particularly focusing on innovation and financial growth across growth industries. Key discussions revolved around energy-efficient computing, artificial intelligence (AI), and advanced semiconductor technologies, signaling critical transformations in tech and telecommunications. At the conference, companies working in the tech universe outlined their strategic outlooks, emphasizing the role of energy-efficient computing in driving semiconductor growth, with industries like AI, IoT, robotics, and autonomous vehicles fueling multi-trillion-dollar shifts.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
One of the highlights of the conference was the appearance of NVIDIA CEO Jensen Huang, who appeared alongside Goldman Sachs CEO David Solomon to discuss the AI industry in great detail. Quizzed about the recent US export controls on chips to China and the rise in geopolitical tensions potentially harming supplies, Huang outlined that his company was confident that if Taiwan Semiconductor Manufacturing Company, the Taiwan-based leading supplier of advanced AI chips to NVIDIA, was compromised, the chip supply would continue, even though it would not be as good. Huang stressed that NVIDIA possessed enough intellectual property to transfer chip production from one plant to another, if need be.
NVIDIA has lost more than 15% of market capitalization since it issued third quarter guidance numbers that raised worries about slowing earnings growth. In particular, there were concerns about the concentration of hyperscalers in the NVIDIA business model, with four large customers representing nearly half of the revenue of the firm in relation to the AI boom. Following the appearance of Huang at the conference, Goldman Sachs semiconductor analyst Toshiya Hari reiterated a Buy rating on the stock, backing the company to pick up sales in the coming months as demand for accelerated computing continued to be really strong and broadened into enterprise and sovereign states.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
Our Methodology
For this article, we selected AI stocks by combing through the proceedings of the Goldman Sachs 2024 Communacopia and Technology Conference. These stocks are also popular among hedge funds. 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).
The inner workings of a semiconductor manufacturing facility, neon hued machines humming with activity.
KLA Corporation (NASDAQ:KLAC)
Number of Hedge Fund Holders: 55
KLA Corporation (NASDAQ:KLAC) markets process control and yield management solutions for the semiconductor industry. Bren Higgins, the CFO of the firm, spoke at the Goldman Sachs 2024 Communacopia and Technology Conference earlier this month, noting that advanced packaging within the semi space was a greater than $500 million opportunity in 2024 compared to about $300 million last year. Per Higgins, Overall, 2024 had been a transition year for the industry, even as the market saw some legacy investment. He added that the chip universe was starting to see more leading edge investment in the second half of the year, a factor that translated into what a pretty good expansion environment for KLA into next year.
Higgins remarked that the strategic goals for KLA Corporation (NASDAQ:KLAC) was preparing for growth as a leading edge solutions provider. He added that his firm was encouraged about prospects of WFE growth across the different players as well, based on a sort of bottom-up and top-down analysis. On the legacy front, per Higgins, the investment levels in China were more or less stable.
Overall KLAC ranks 9th among the buzzing AI stocks to buy according to Goldman Sachs. While we acknowledge the potential of KLAC as an investment, our conviction lies in the belief that some 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 KLAC 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.