Unlocking the Future of AI with Metrology Equipment
When it comes to the manufacturing of advanced semiconductors used in artificial intelligence (AI) systems, there is a key player that often flies under the radar: metrology equipment.
Metrology (the science of measurements) and process diagnostics and control (PDC, a form of quality control for manufacturing processes) play a crucial role in ensuring that chips function correctly and are free from defects that could impact performance. This makes metrology equipment an essential component in the development of AI systems, acting as a gatekeeper to unlocking more powerful computing.
While KLA Corp. has been a well-known name in the metrology equipment industry, Onto Innovation is a smaller competitor that has been gaining significant momentum. After a 2019 merger between two smaller metrology companies, Onto Innovation has scaled up its operations to achieve higher efficiency and profitability. This has enabled the company to invest in and introduce new metrology technologies that cater to the evolving needs of chip manufacturers like Taiwan Semiconductor Manufacturing and Intel.
One of the key reasons behind Onto Innovation’s success is its ability to address all aspects of the complex chip-making process, from advanced wafer inspection to the final packaging of chips into computing systems. The company continues to innovate and develop cutting-edge equipment to support its customers’ product roadmaps for years to come.
Despite the recent surge in Onto Innovation’s stock price, the company’s valuation metrics may not tell the whole story. While the stock may appear expensive based on trailing-12-month earnings and free cash flow, it’s essential to consider the cyclical nature of manufacturing-based businesses like Onto. The company has already demonstrated a significant rebound in profits, with promising revenue and profitability projections for the coming quarters.
Looking ahead, the semiconductor industry is poised for growth, with numerous chip fabrication projects underway globally. Advanced wafer fab equipment, like the ones provided by Onto Innovation, is expected to reach record levels in the coming years, presenting a favorable outlook for the company’s sales.
While Onto Innovation’s stock may not replicate its exceptional performance of the past year, there could still be substantial upside potential for this under-the-radar AI stock. With the semiconductor market heating up and Onto’s continued innovation and expansion, investors may find value in holding onto their positions for the long haul.
At Extreme Investor Network, we believe in identifying hidden gems like Onto Innovation that have the potential to deliver significant returns in the future. Keep an eye on emerging trends in the semiconductor industry and consider investing in companies that are at the forefront of innovation and technological advancement.
Disclaimer: Extreme Investor Network does not provide personalized investment advice. Investors should conduct their research and consult with a financial advisor before making any investment decisions.