The company’s shares are up 25% in 2024 and are up 89% over the past 12 months.
Amid the uncontrolled expansion of Artificial Intelligence (AI), there is one company that could benefit from it.
Chip makers like TSMC use the California-based company’s products to improve manufacturing efficiency.
We are talking about KLA which is renowned for producing semiconductor manufacturing equipment used in a process known as “yield management”.
TSMC, the exclusive maker of high-end AI chips for Nvidia, is also KLA’s largest customer.
While not a top AI stock per se, Stephanie Niven, head of global sustainable equity portfolio at Ninety One, says KLA plays a critical role in supporting AI capabilities.
The fund manager also highlights that by reducing waste in a resource-intensive production process, an investment in KLA can also be considered from a sustainability perspective.
“KLA is a semiconductor equipment manufacturer and fits into the AI supply chain,” Niven said. “This is an activity that decarbonizes the transition to AI because it reduces errors and increases returns.”
KLA Corp is the eighth largest stock in Niven’s Ninety-One Global Sustainable Equity fund, with a 4.7% allocation. The fund beat its benchmark in 2022.
KLA has generated impressive returns amid growth in AI semiconductors. The company’s shares are up 25% in 2024 and are up 89% over the past 12 months.
Currently, the stock trades at 27 times forward earnings, compared to its five-year average of 18 times earnings. Wall Street analysts warn that significant growth in the stock price could lead to a decline in the near term.
“Given the stock’s recent strengths, it would not be surprising if the stock falls tomorrow,” Stifel analysts led by Brian Chin said in a note to clients. The target price of all analysts compiled by FactSet indicates a decline of 6.7%. However, most analysts are bullish on the company’s valuations, with a "buy" rating.
Analysts expect improved sales in the second half of this year and further development in 2025, when the latest transistor manufacturing technology, “Gate-All-Around”, will be implemented at chip manufacturers such as Intel, TSMC, and Samsung.
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Original article published on Money.it Italy 2024-03-27 07:00:00. Original title: Scordatevi Nvidia. C’è un titolo tecnologico cresciuto dell’89% in un anno
