To The Moon

As we step into a new year of market opportunities, savvy investors are scanning the tech sector for potential bargains. After a tumultuous 2024 for tech stocks, marked by sharp corrections and fluctuating investor sentiment, a clear theme has emerged: some of last year’s laggards could be tomorrow’s leaders. This article delves into why buying underperforming tech giants in the S&P 500, particularly ASML and AMD, could be a winning strategy for 2025.

Laggards in Tech: A Hidden Gem?

Tech stocks have historically been a mixed bag during market corrections. While some names bounce back swiftly, others take time to regain momentum. Data shows that buying the laggards of the tech sector often leads to significant outperformance compared to the broader S&P 500. This is especially true for companies with robust fundamentals, a clear competitive edge, and strong growth prospects—all characteristics of ASML and AMD.

The Case for ASML: Powering the Semiconductor Revolution $ASML Holding NV(ASML)$

ASML Holding (NASDAQ: ASML), a critical player in the semiconductor industry, is not just a company—it’s a linchpin in the global tech supply chain. ASML is the exclusive manufacturer of extreme ultraviolet (EUV) lithography machines, an essential technology for producing advanced semiconductors. With global semiconductor demand projected to grow exponentially, ASML’s dominance in this niche market places it in a unique position to capitalize on the ongoing tech boom.

2024 Challenges and Opportunities

In 2024, ASML faced headwinds due to geopolitical tensions and a slowdown in chip demand. These factors contributed to its stock lagging behind its peers. However, the long-term growth narrative remains intact. The company’s EUV machines are indispensable for manufacturing cutting-edge chips used in artificial intelligence (AI), 5G, and autonomous vehicles—sectors expected to drive tech innovation for years to come.

Why ASML is a Buy

Despite its pullback, ASML’s valuation is now more attractive. For long-term investors, this represents a prime buying opportunity. As the semiconductor cycle turns and AI-driven applications expand, ASML’s revenue streams are poised to grow significantly. I am personally invested in ASML and confident that its strategic importance in the tech ecosystem makes it a must-have for any tech portfolio.

AMD: A Powerhouse in AI and Beyond $Advanced Micro Devices(AMD)$

Advanced Micro Devices (NASDAQ: AMD) is another tech heavyweight that experienced a challenging 2024. Once hailed as the challenger to Intel’s dominance, AMD has evolved into a leading force in high-performance computing and graphics processing units (GPUs). The company’s AI-focused strategies and product innovations make it a compelling pick for investors looking to ride the AI wave.

2024 in Review

AMD’s stock performance in 2024 was overshadowed by stiff competition and market-wide tech selloffs. However, the company continued to make strides in its AI offerings. Its MI300 GPUs, designed for data centers, have garnered attention as a formidable competitor to Nvidia’s dominance. As AI adoption accelerates across industries, AMD is well-positioned to capture a significant share of this lucrative market.

Why AMD Deserves a Spot in Your Portfolio

AMD’s ability to innovate and adapt has been a hallmark of its success. With a diversified product portfolio spanning CPUs, GPUs, and AI accelerators, the company is not overly reliant on any single revenue stream. Its recent stock underperformance presents an opportunity for investors to buy into a company that combines growth potential with a proven track record. Like ASML, I hold AMD in my portfolio and firmly believe it will reward patient investors in the years to come.

The AI Factor: A Rising Tide Lifting All Boats

Artificial intelligence is arguably the hottest sector in tech right now, and both ASML and AMD are deeply entrenched in this space. ASML’s lithography machines enable the production of AI chips, while AMD’s GPUs are designed to power AI applications. The AI market is still in its early stages, with exponential growth expected in the coming decade. Investing in companies at the forefront of this revolution is not just a strategy; it’s a necessity for those looking to capitalize on the next big wave in technology.

Long-Term Investing: A Lesson in Patience

One of the core tenets of successful investing is to focus on the long term. As Peter Lynch famously said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” Holding high-quality stocks through market volatility often yields better results than attempting to time the market.

For ASML and AMD, the current price levels offer a chance to average down and build a stronger position. Both companies are backed by solid fundamentals and operate in sectors with massive growth potential. As a long-term investor, my strategy is simple: accumulate shares during market pullbacks and hold until I need the capital. This approach has consistently proven effective in navigating the ups and downs of the market.

Final Thoughts

In conclusion, the tech sector’s recent pullback is a golden opportunity for investors to add high-quality names like ASML and AMD to their portfolios. These companies are not only leaders in their respective fields but also critical enablers of the broader tech ecosystem. With the AI revolution just beginning, both ASML and AMD are well-positioned to deliver strong returns in the years ahead.

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