We recently published a list of 10 AI stocks that could go parabolic, according to financial media. In this article, we take a look at how ASML Holding NV (NASDAQ:ASML) compares to other AI stocks.

One of the key drivers of the AI ​​industry’s growth in recent years has been the exponential increase in data generation. The rise of the Internet of Things (IoT), social media, e-commerce, and various digital platforms has led to an unprecedented increase in data production. These huge amounts of data serve as fuel for AI systems, especially in the development of machine learning models. Clive Humby, a venture capitalist, highlighted the crucial role of data in AI development by famously saying that data is the new oil. The ability to collect, process, and analyze large data sets enables AI algorithms to improve accuracy and deliver more sophisticated results.

For more information on these developments, see Top 33 AI companies to watch out for And 20 industrial stocks that are already riding the AI ​​wave.

To understand the AI ​​revolution, it is also important to understand advances in computing power. Moore’s Law, which predicts a doubling of the transistors on a microchip roughly every two years, has played a critical role in improving the computing power available for AI applications – think of companies like Taiwan Semiconductor Manufacturing and their advanced node processing. The advent of graphics processing units (GPUs) and tensor processors (TPUs) – as popularized by NVIDIA – has further accelerated AI development by enabling faster calculations and more complex model training. Ray Dalio, founder of Bridgewater employeesone of the largest hedge funds in the world, says these hardware improvements have been critical to AI.

The availability of massive investments in AI research and start-ups is also a key growth driver. According to a report by PwC, global investment in AI is expected to reach $15.7 trillion by 2030, with the technology contributing $6.6 trillion to GDP through productivity gains and $9.1 trillion through consumption effects. This influx of capital is fueling innovation and the commercialization of AI technologies in various sectors, from healthcare to finance. Prominent hedge fund managers are also taking notice. Ken Griffin, the head of Citadel Investment Groupsays that AI is the most disruptive technology of our time and not just another bubble, but a structural change in the economy.

For more information on these developments, see Billionaire Stan Druckenmiller invests in AI infrastructure, tobacco and industrial stocks And 10 tech stocks to watch amid market volatility, according to Bernstein analyst..

Our methodology

For this article, we’ve selected AI stocks that financial news outlets say have explosive growth potential. These stocks are also popular with hedge funds. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (read more details here).

A technician works on a semiconductor device in a clean room under the light of the machines.

ASML Holding NV (NASDAQ:ASML)

Number of hedge fund owners: 81

ASML Holding NV (NASDAQ:ASML) manufactures and sells advanced semiconductor equipment systems. ASML is important to the AI ​​world because it provides lithography systems needed to produce microchips. These microchips are found in smartphones, computers, tablets, cars, industrial equipment, and other consumer electronic products. According to recent reports, the company has made a new breakthrough with a new chip printing machine and developed an EUV scanner that allows customers to develop their own high NA EUV use cases. The new machine can produce some of the smallest logic and memory chips currently in production.

Peter Wennink, CEO of ASML Holding NV (NASDAQ:ASML), said during the company’s second-quarter conference call that the company has seen healthy growth this year, primarily driven by AI-related demand for logic and memory, but also expected from other end markets as inventory levels improve. He added that there are long-term growth drivers for the company in the semiconductor end markets, such as electrification, energy transition and AI.

ASML total 5th place on our list of AI stocks that could go parabolic according to financial media. While we recognize ASML’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than ASML but trades at less than 5x its earnings, read our report on the cheapest AI stock.

READ MORE: Michael Burry is selling these shares And Jim Cramer recommends these stocks.

Disclosure: None. This article was originally published on Insider Monkey.