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Fund manager Stephanie Niven says KLA Corp. could be one of the lesser-known semiconductor equipment companies to benefit from the AI boom. KLA is known for manufacturing semiconductor manufacturing equipment used in a process called “yield management.” Chipmakers like TSMC use the California-based company’s products to improve manufacturing efficiency. His TSMC, the exclusive manufacturer of high-end AI chips for Nvidia, is also KLA’s largest customer. Although the KLAC 1Y Line AI stock itself is not the center of attention, Niven, Global Sustainable Equity Portfolio Manager at Ninety One, says KLA plays an important support role in enabling his AI capabilities. said. The fund manager also pointed out that investing in KLA can also be viewed from a sustainability perspective by reducing waste in resource-intensive manufacturing processes. ”[KLA] “The company is a semiconductor equipment manufacturer and is leaning into the AI supply chain,” Niven said Friday on CNBC’s “Squawk Box Europe.” “This is a business that decarbonizes the transition to AI to reduce errors and increase yield,” he said. It is the eighth largest holding in Niven’s Ninety One Global Sustainable Equity Fund, with an allocation of 4.7%. The fund outperformed its benchmark in 2022. KLA is making impressive profits amid the boom in AI semiconductors. The company’s stock price rose 25% in 2024. The stock price has soared 89% in the past 12 months. He currently trades at 27 times forward earnings, compared to an average of 18 times earnings over the past five years. Forward returns are an important metric used by traders to measure the value of an asset or index. Wall Street analysts have warned that strong stock price gains could lead to declines in the short term, with analysts at Stifel led by Brian Chin saying, “The recent strength in stock prices… “Given that, it wouldn’t be surprising if stock prices went down tomorrow.” The consensus price target among all analysts compiled by FactSet indicates a 6.7% downside. However, the majority of analysts have a bullish buy rating on the company’s fundamentals. Mr. Niven also dismissed KLA’s high valuation multiple, suggesting that KLA’s future is very different from its past. “Businesses change. You have to look forward. ‘What is the growth opportunity today and why is this business deploying capital to support a sustainable return to that growth opportunity?’ ‘Is it true?’” she added. Analysts also expect KLA’s fortunes to pick up in the second half of this year and continue to do well in 2025, when chipmakers such as Intel, TSMC and Samsung take hold of the latest transistor manufacturing technology, “gate-all-around.” ing.
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