Thursday morning, investors saw the stock market poised to open with mixed results. Nvidia (NVDA -0.49%), the chipmaker, released its quarterly results late Wednesday and as a result, saw its stock jump 28% in pre-market trading. Consequently, futures on the Nasdaq Composite (^IXIC) had risen nearly 2%, even as Dow Jones Industrial Average (^DJI) futures dipped.
The robust performance was largely driven by record demand for products which integrate AI capabilities. However, some investors may still feel NVIDIA stock is too costly, so here are a couple of alternatives that are worth considering: Taiwan Semiconductor Manufacturing (TSM -0.34%) and ASML (ASML -2.15%).
Taiwan Semiconductor Manufacturing’s stock has gone up by 7% in pre-market trading, giving the company a market cap nearly half that of NVIDIA. The largest semiconductor contract manufacturing company, Taiwan Semi allows its clients to provide chip designs with their specific specs, then produces the chips accordingly. Last year saw the company handle nearly 12,700 different chips using 300 different process technologies – much of this was in response to the rise in AI-related products, setting the company up well going forward.
On the other hand, ASML is a semiconductor equipment manufacturer, who are set to benefit from the AI trend also. ASML are pioneers in lithography, a process used to etch electronic circuits onto semiconductor wafers. The company has developed extreme ultraviolet deposition technology, which makes chips smaller and more densely packed. This has enabled ASML to meet increasing demand, seen in a surge in revenue and net income over the first quarter of 2023.
For those looking for AI stocks which may not have gained as much as NVIDIA, Taiwan Semi and ASML may be better suited to their investment goals and expectations. With Taiwan Semi’s impressive leadership position and contract production capabilities, and ASML’s cutting-edge equipment and technology, both companies offer promising opportunities for growth and potential returns.
