Buy this under-the-radar stock to play the AI hardware boom, strategist says
Investment strategist Anthony Doyle has flagged one Dutch chip stock to play the booming AI trend — and it’s not ASML . Instead, Doyle, who’s head of investment strategy at the Sydney-headquartered Firetrail Investments, likes BE Semiconductor Industries , which supplies semiconductor assembly equipment. Doyle described BE Semiconductor as a “less favored way to play the boom in AI hardware.” It produces the equipment needed for the hybrid bonding process, which forms the permanent bond between chips or wafers. BE Semiconductor holds a 90% market share in the hardware manufacturing space, Doyle added, and counts chipmaking giant Taiwan Semiconductor Manufacturing Co among its clients. Like ASML — the Dutch-headquartered company that makes the high-tech machines relied upon by the world’s biggest chipmakers — BE Semiconductor is listed on the Euronext Amsterdam. Shares also trade in the U.S. as an American Depositary Receipt. BESI-NL YTD mountain Besi Investment bank Morgan Stanley is also bullish on BE Semiconductor , describing it as a “virtual monopolist in the nascent hybrid bonding technology currently being adopted by multiple large semiconductor manufacturers.” The analysts expect the company’s revenue to continue growing in the years ahead. BE Semiconductor’s shares are up around 8% over the year to date, after falling when the company forecast flat sales for the third quarter during its latest earnings. ASML’s shares, in comparison, are over 30% higher over the last 12 months. According to FactSet data, of 20 analysts covering the stock, 12 give it a buy or overweight rating, and the remaining eight have a hold call. The average price target on the shares is 152.79 euros ($168.95), giving them around 33% upside potential. Morgan Stanley has a target price of 180 euros on the stock, giving it over 55% upside potential. Other stocks to watch Beyond BE Semiconductors, Doyle described TSMC as a “compelling [stock] compared to many other hardware manufacturers” from a valuation perspective. “It’s just so dominant, and … far ahead of the curve in terms of their competition as well,” he added. Elsewhere, he’s overweight on Europe, naming Air Liquide and Schneider Electric as companies on his radar.
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