Smart Stock Investments Amid Bull Market Trends

Are you searching for stocks with the potential for significant returns? There are several discounted tech leaders that may be well-positioned for strong gains.

In 2024, tech stocks have been thriving, mainly driven by a surge in demand for artificial intelligence (AI). Giants like Nvidia, Apple, Microsoft, and Palantir have reached new valuation heights, contributing to remarkable returns for major stock indexes.

For instance, the S&P 500 has seen a 28% increase this year, while the tech-heavy Nasdaq Composite has jumped 32%. However, despite the ongoing bull market and impressive performances from many prominent companies, there are still excellent growth opportunities available for stocks that have significantly declined from their previous highs.

As we explore these investment possibilities, we highlight two companies that could offer smart buying opportunities right now.

Leading Company in AI Technology Facing a Decline

Keith Noonan (ASML): The demand for high-performance semiconductors is at an all-time high. For example, Nvidia’s chips play a critical role in driving the AI revolution. These advanced semiconductors are essential for data centers, cloud computing, and consumer devices.

One of the most crucial players in this space is ASML, the world's top supplier of lithography machines used in semiconductor manufacturing. They are virtually the sole provider of extreme ultraviolet lithography (EUL) machines that produce the most sophisticated chips.

Despite its leading position in a market with strong growth potential, ASML's stock price has fallen 35% from its recent highs this year. What has caused this decline? Geopolitical tensions, specifically between the U.S. and China, have resulted in export restrictions on ASML's advanced machines. Additionally, there's been a slowdown in demand within lower-end chip manufacturing.

While ASML may face some volatility due to these external pressures and cyclical trends, it remains an essential player in the semiconductor landscape. The company's technological edge positions it for long-term success, which should translate into strong returns for investors.

Machine Vision Technology is Set for Future Growth

Lee Samaha (Cognex): The future looks bright for Cognex, a company specializing in machine vision equipment. Although it has faced a downturn in demand in recent years due to temporary market conditions, its long-term growth outlook is still promising, especially given that its stock price has plummeted about 60% from its all-time high.

The recent decline can be attributed to a cyclical slowdown in key sectors like automotive, consumer electronics, and logistics, largely influenced by rising interest rates affecting discretionary spending. This has led to reduced investments in assembly lines and machine vision technologies.

Despite this short-term weakness, the fundamental demand trends for machine vision continue to grow. This technology supports automation and enhances efficiency in production processes, which is especially important as more companies look to reshore manufacturing closer to home.

Cognex aims for a long-term annual growth rate of 15%. As market conditions improve, the company is expected to return to this growth trajectory.

Keith Noonan and Lee Samaha do not hold positions in the stocks mentioned.

Stocks, Investing, Market