We recently compiled a list of the Top 10 AI Stocks on Latest News and Analyst Ratings. In this article, we are going to take a look at where ON Semiconductor Corporation (NASDAQ:ON) stands against the other AI stocks.
Hugh Gimber, global market strategist at J.P. Morgan Asset Management, joined CNBC’s Squawk Box Europe to discuss the sectors poised to benefit from the artificial intelligence boom as the dominance of the “Magnificent 7” fades.
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Gimber anticipates a broadening across sectors in 2025, stating that the current gap between Mag7 and the rest doesn’t make sense. This is because it is unrealistic to have a handful of stocks priced as if they are going to unlock new productivity across the economy alone, while other sectors don’t witness any major earnings upgrades.
He further stated that he believes the story for next year is to see some of those earnings benefits coming through in sectors such as financials, manufacturing, and healthcare, particularly, as these sectors start to reap the rewards of the capital expenditures already initiated by tech giants.
As the gap between mega caps and the rest starts to close, it is going to set the stage for a healthy market and more opportunity under the surface. As such, attention turns to how quickly certain stocks respond and what unfolds as the market acknowledges the increasing number of AI-related opportunities heading into the year.
For instance, some utility names could emerge as critical players, and healthcare stands out as a particularly strong candidate for growth. There are going to be plenty of examples that are showing up over the next few quarters, and some of the biggest gains might come from names that aren’t yet on the radar.
As of today, artificial intelligence stocks are still the hottest in the market, even though the Magnificent Seven has delivered mixed results lately due to concerns over escalating expenditures and valuation pressures.
In a notable shift, Barron’s reports that investor sentiment may be shifting from AI infrastructure providers, such as those focusing on hardware and cloud-based resources, toward software-centric players. These software companies are now being recognized for their potential to deliver higher margins, scalability, and faster adoption cycles as AI applications permeate industries ranging from healthcare to finance and beyond.
Moreover, the upcoming inflation report, seen as a key to future interest rates, is also causing investor skepticism. While AI stocks are poised for long-term growth as the technology continues to revolutionize multiple sectors, short-term fluctuations remain tied to macroeconomic concerns.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. 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).
A semiconductor engineer in a state-of-the-art laboratory, analyzing advanced semiconductor products.
ON Semiconductor Corporation (NASDAQ:ON)
Number of Hedge Fund Holders: 45
ON Semiconductor Corporation (NASDAQ:ON), or onsemi, is a semiconductor manufacturing company that provides intelligent sensing and power solutions. On December 9, the company announced that it has agreed to acquire the Silicon Carbide Junction Field-Effect Transistor (SiC JFET) technology business from Qorvo for $115 million in cash. The acquisition, including the United Silicon Carbide subsidiary, will be a valuable addition to Onsemi’s extensive EliteSiC power portfolio, the company’s line of high-performance power semiconductor devices based on Silicon Carbide (SiC) technology. The move will enable it to meet the growing needs for energy and power density for AI data centers. It will also help the company excel in emerging markets such as EV battery disconnects and solid-state circuit breakers (SSCBs).
“As AI workloads become more complex and energy-intensive, the importance of reliable SiC JFETs that deliver high energy efficiency and are able to handle high voltages will continue to increase. With the addition of Qorvo’s industry leading SiC JFET technology, our intelligent power portfolio offers our customers yet another solution to optimize energy consumption and increase power density.”
-Simon Keeton, group president and general manager of the Power Solutions Group, onsemi.
Overall, ON ranks 5th on our list of top 10 AI stocks on latest news and analyst ratings. While we acknowledge the potential of ON 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 time frame. If you are looking for an AI stock that is more promising than ON 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.