We recently compiled a list of the 10 Most Promising Tech Stocks According to Hedge Funds. In this article, we are going to take a look at where ASML Holding N.V. (NASDAQ:ASML) stands against the other promising tech stocks.
NASDAQ is Poised for Long-Term Returns
Big tech is expected to outperform in the coming months. On October 2, Ari Wald, Oppenheimer’s Head of Technical Analysis, appeared in an interview on Yahoo Finance to discuss his market thesis and explain why investors must consider high-growth companies.
Wald highlights that market breadth is expected to remain high supporting extended highs throughout the end of 2024. In addition to that, he expects the bull cycle to remain intact and believes the trend will continue in 2025. During the late summer, the market saw a change in the high beta versus low volatility ratio stocks. It was seen that high-beta stocks could not keep up with high dividend-paying and lower-volatility names.
Given the rotational nature of the market, Wald expects higher beta names to make a strong comeback and reclaim their leadership position. Wald suggests that investors should consider investing in higher growth companies, as the Nasdaq and Russel 100 are expected to lead again. Trends show that the mag seven is growing and climbing, as the market conditions continue to settle.
Viewing Tech Stocks on Valuations Alone is Wrong, Strategist Says
Technology stocks have more room to run. On October 14, Malcolm Ethridge, Capital Area Planning Group managing partner, appeared in an interview on CNBC where he discussed the technology market outlook and revealed his favorite picks.
Ethridge suggests that judging stocks based on their valuations alone is a big mistake, especially in the current market cycle which is heavily influenced by the AI boom. Looking at the broader perspective, he believes there are a lot of positive opportunities among the magnificent seven and outside of it.
He adds that companies among the mega tech have been pouring billions into generating large language models and the likes of it. He also suggests that most of this technology is yet to be understood and therefore the true value we can derive from these technologies is yet to come. These companies also have a lot of intrinsic value and there is more to be realized soon.
Now that we have studied the technology market outlook, let’s take a look at the most promising tech stocks according to hedge funds. You can also read our piece on the most promising AI stocks according to analysts.
Our Methodology
To come up with the most promising technology stocks according to hedge funds, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising tech stocks based on the hedge fund sentiment as of Q2 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 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 N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) is a semiconductor equipment company headquartered in the Netherlands. Companies use ASML’s extreme ultraviolet (EUV) lithography machines to develop AI chips.
In the second quarter of 2024, ASML Holding N.V. (NASDAQ:ASML) logged $6.91 (EUR 6.2 billion) in revenue and expects net sales to grow to somewhere between $7.47 billion (EUR 6.7 billion) and $8.14 billion (EUR 7.3 billion) in Q3 2024.
ASML Holding N.V. (NASDAQ:ASML) believes 2024 is a transition year and will continue to invest in increasing its capacity and improving its technology to meet the surging demand in 2025. For its 2030 guidance, ASML Holding N.V. (NASDAQ:ASML) projected between EUR 44 billion and EUR 60 billion in revenue. The company has an 83% market share in lithography, explaining why 81 hedge funds were long on the stock at the end of Q2 2024.
According to the company’s CEO, semiconductor inventory and litho tool utilization levels have consistently improved over the past few months for both logic and memory customers. While the macroeconomic and geopolitical environment is turbulent, ASML Holding N.V. (NASDAQ:ASML) expects the industry to recover during the second half of 2024.
Polen Capital 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 ranks 9th on our list of the most promising tech stocks according to hedge funds. While we acknowledge the potential of ASML as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.