Rather than trying to pick stocks, ETFs allow investors to back broad themes, regions, or investment styles through a single ASX-listed investment. For those wanting to spread risk while positioning for long-term growth, the right mix of ETFs can be a powerful tool.

With that in mind, here are three ASX ETFs that could appeal to investors looking for exposure to very different global themes.

iShares S&P 500 AUD ETF (ASX: IVV)

The first ASX ETF that could be a buy is the iShares S&P 500 ETF. It is one of the simplest ways for Australian investors to gain exposure to the US share market.

This fund tracks the S&P 500 Index, which includes 500 of the largest and most influential stocks listed in the United States. These businesses operate across technology, healthcare, consumer goods, financials, and industrials, making the index a broad representation of corporate America.

What makes the IVV ETF particularly attractive is the quality of its underlying holdings. The S&P 500 includes global leaders with scale, strong balance sheets, and significant pricing power. Over long periods, these companies have benefited from innovation, productivity growth, and access to the world's largest capital market.

VanEck MSCI International Value ETF (ASX: VLUE)

Another ASX ETF that could be worth considering is the VanEck MSCI International Value ETF. It offers a very different approach by focusing on valuation rather than momentum.

This fund invests in a diversified portfolio of international large- and mid-cap companies that exhibit value characteristics, such as lower price-to-earnings and price-to-book ratios relative to peers. The portfolio spans multiple countries and sectors, reducing reliance on any single market.

Its holdings currently include Micron Technology (NASDAQ: MU), Western Digital (NASDAQ: WDC), and Cisco Systems (NASDAQ: CSCO).

The VanEck MSCI International Value ETF was recently recommended by the fund manager.

VanEck China New Economy ETF (ASX: CNEW)

Finally, the VanEck China New Economy ETF could be a top pick for Aussie investors.

This ASX ETF is designed to capture the evolution of China's economy away from traditional industries and toward technology, consumption, and innovation.

It invests in Chinese stocks operating in areas such as ecommerce, digital services, healthcare innovation, and advanced manufacturing. These businesses are often aligned with rising domestic consumption and long-term structural change within the Chinese economy.

While investing in China comes with additional risks, this fund offers targeted exposure to growth areas that are traditionally difficult to access. It was also recently recommended by VanEck.

The post Why the IVV ETF and these funds could be top buys in 2026 appeared first on The Motley Fool Australia.

The S&P 500 Index (SP: INX) soared 16.39% and delivered total returns, including dividends, of 17.88%, according to S&P Global.

The S&P 500 reached a record 6,945.77 points in December before closing the year at 6,845.5 points.

The Nasdaq Composite Index (NASDAQ: .IXIC) did even better, rising 20.36% with total returns of 21.33%.

The Nasdaq Composite hit its peak in October at 24,019.99 points before closing at 23,241.99 points on 31 December.

The Dow Jones Industrial Average Index (DJX: .DJI), which tracks the performance of 30 selected S&P 500 stocks, rose 12.97% and delivered total returns of 14.92%.

The Dow Jones Index closed 2025 at 48,063.29 points, and hit a new record overnight at 49,209.95 points.

By comparison, S&P/ASX 200 Index (ASX: XJO) shares rose 6.8% and produced total returns of 10.32% in 2025.

The ASX 200 rose to a record 9,115.2 points in October before finishing the year at 8,714.3 points.

The S&P/ASX All Ords Index (ASX: XAO), which tracks the top 500 companies, rose by 7.11% and gave a total return of 10.56%.

The ASX All Ords closed 2025 at 9,018.8 points after hitting a record in October at 9,414.6 points.

Top 5 US stocks and ASX shares of 2025

According to Yahoo Finance, the top five US stocks for growth last year were:

1. Flash memory designer and manufacturer Sandisk Corp (NASDAQ: SNDK), up 548%

2. Data storage company and hardware manufacturer, Western Digital Corp (NASDAQ: WDC), up 335%

3. Computer data storage company, Micron Technology Inc (NASDAQ: MU), up 222%

4. Global data storage solutions company, Seagate Technology Holdings PLC (NASDAQ: STX), up 220%

5. US stocks trading platform provider, Robinhood Markets, Inc. (NASDAQ: HOOD), up 183%

The top five ASX All Ords shares for growth were:

1. Anti-drone technology company DroneShield Ltd (ASX: DRO), up 300%

2. Gold miner Pantoro Gold Ltd (ASX: PNR), up 220%

3. Gold explorer Predictive Discovery Ltd (ASX: PDI), up 220%

4. Gold miner Resolute Mining Ltd (ASX: RSG), up 206%

5. Lithium miner Core Lithium Ltd (ASX: CXO), up 206%

Check out the best performing ASX 200 shares here.

What's next for US stocks in 2026?

In its 2026 investment outlook, Morgan Stanley projected that S&P 500 shares will rise to 7,800 points by the end of the new year.

That would represent an annual gain of 13%.

The broker expects US earnings and cash flow growth due to a market-friendly policy mix, interest rate cuts, corporate tax cuts from the 'One Big Beautiful Act', positive operating leverage, and the re-emergence of pricing power and AI-driven efficiency gains.

Serena Tang, Morgan Stanley's Chief Global Cross-Asset Strategist, said:

There will be some bumps along the way, but we believe that the bull market is intact.

Another broker, UBS, predicts the S&P 500 will lift to 7,300 points by June and 7,700 points by Christmas.

UBS said US stocks will be driven by about 10% earnings growth and lower interest rates.

In an article, the broker said: 

In addition to the transformative force of AI, we believe the structural trends of electrification and longevity will also drive equity performance for the long term.

Tactically, we believe AI beneficiaries are broadening out both within and beyond tech, and we see opportunities in companies facilitating grid modernization and supply critical raw materials.

In the longevity field, we expect strong growth in the obesity, oncology, and medical device markets.

Check out which US stocks are most popular with Aussie investors and why.

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Quantum computing is less a machine than a mission -- a team of scouts sent to explore a landscape too complex to map by sight. Each scout sets out along a different path, testing what's possible in parallel. Together, they can sense many routes at once -- that's the genius of the approach. 

The challenge is keeping the team in contact. The radios crackle, the maps blur, and even a shift in weather can scatter their signals. These scouts -- qubits -- are astonishingly sensitive. They can explore multiple directions simultaneously, but the hardware carrying them is still too fragile for the conditions. A breath of heat or a tremor of noise can throw the expedition off course.

So instead of racing ahead, researchers spend most of their time stabilizing the mission: fixing equipment, recalibrating coordinates, and rerunning lost trails. The frontier remains open, but progress comes in slow, careful steps. That patience has defined the field -- until now. And suddenly, the rhythm changed.

A new command post

At its recent D.C. conference, Nvidia (NASDAQ: NVDA) unveiled technology that could quicken that pace. Its new hybrid system -- NVQLink and CUDA-Q -- acts like a central command post for the scouts. It doesn't ease the terrain, but it strengthens communication.

NVQLink connects quantum processors (the scouts) with today's computing systems (the analysts) at microsecond speed -- orders of magnitude faster than before. CUDA-Q, Nvidia's open-source software layer, lets researchers choreograph that link -- running AI models, quantum algorithms, and error-correction routines together as one system. That jump allows artificial intelligence to monitor the expedition in real time, learning the patterns of interference and correcting them before the team drifts apart. 

Why would Nvidia care so much about a field still years from profit? Because whoever builds the bridge first controls the traffic that follows.

It's the difference between reviewing the map after every failed trip and guiding the scouts live as they move. For researchers, that means hundreds of new iterations where there used to be one -- a genuine acceleration of discovery. It's the quiet kind of progress engineers love -- invisible, but indispensable.

Owning the bridge between today and tomorrow

Nvidia didn't build new scouts; it built the infrastructure that keeps them coordinated. Its GPUs (graphics processing units) are already tuned for the dense, parallel calculations these explorations demand, making them the natural partner for any emerging quantum processor.

And that partnership matters. Nvidia's GPUs remain the most widely used AI chips available today, refined by two decades of iteration and supported by the industry's most mature software stack. The CUDA platform gives developers fine-grained control -- the ability to tune workloads, manage memory, and orchestrate timing with precision. That precision is what gives researchers trust; each improvement in control becomes a new kind of progress. In the context of quantum research, that means any new quantum chip can be optimized alongside the fastest general-purpose GPUs on the planet.

Other companies chase better quantum hardware -- superconducting, photonic, trapped-ion -- but all of them need reliable coordination with the computing power we already have. By offering that link, Nvidia turns its GPU ecosystem into the operating environment of hybrid computing, the connective tissue between what exists now and what's coming next.

And because the system is open, every new lab or start-up that connects strengthens Nvidia's position as the default hub for quantum experimentation.

The horizon these scouts are chasing isn't abstract. It's the kind of problem today's computers stumble over -- predicting the behavior of a turbulent atmosphere before a storm forms, modeling molecules to design safer drugs, simulating new materials that could store clean energy or filter carbon from air. Each of those challenges involves trillions of interacting possibilities. Quantum systems, in theory, can explore those possibilities in parallel, finding patterns that would take current technology decades or centuries to compute. Nvidia's faster link doesn't solve those mysteries yet -- it simply means the explorers can search more of the map each day.

Strategic patience

There's also a defensive wisdom in this move. If quantum computing ever matures, it could threaten the same data center model that built Nvidia's empire. CEO Jensen Huang seems intent on making sure that, if the future shifts, Nvidia already sits at its center.

By owning the bridge between today's technology and tomorrow's, the company ensures it earns relevance -- and revenue -- no matter which computing model dominates. Quantum's maturity may still be years away. But the learning curve just steepened -- and Nvidia holds the compass.

The quiet beneficiaries

Even the best explorers need suppliers. Quantum computing's next leap won't come from a single breakthrough, but from the infrastructure that lets quantum and AI work side by side. The companies that stand to benefit first are those already essential to Nvidia's hardware stack -- firms positioned where quantum meets GPU.

TSMC: The fabrication anchor

Every Nvidia GPU and NVQLink controller originates from Taiwan Semiconductor Manufacturing Comany's (NYSE: TSM) leading-edge nodes. Hybrid systems only deepen that reliance through advanced packaging and interconnect design.

No other foundry matches TSMC's yields or scale; hybrid compute extends its dominance.

Micron: The bandwidth supplier

Hybrid workloads move immense volumes of data between GPUs and quantum controllers. Micron's (NASDAQ: MU) high-speed memory powers the data flow that keeps those systems responsive.

Micron is the only U.S.-based memory manufacturer directly supporting government-backed efforts to build the public-sector half of the hybrid-quantum ecosystem.

What today's high-speed memory does is keep the conversation alive around that fragile state -- the AI models, calibration maps, and feedback loops that tell the qubits what to do next. And as we venture further into the unknown, we'll need a great deal more of it to keep that dialogue going.

Broadcom: The interconnect enabler

Broadcom's (NASDAQ: AVGO) networking and optical interconnects provide the ultra-low-latency backbone that NVQLink depends on.

Every AI and future hybrid data center flows through Broadcom's connectivity layer; quantum integration magnifies its role.

Precision, bandwidth, and connection are the quiet trinity of hybrid progress.

ASML: The toolmaker behind precision

ASML's (NASDAQ: ASML) EUV (extreme ultraviolet) lithography powers the control electronics that tie quantum processors -- known as QPUs -- and GPUs together.

There is no replacement for EUV at advanced nodes; hybrid architectures only increase demand for ASML's tools.

For investors, these are the near-term names to watch: companies that already profit from AI infrastructure and now stand to benefit from its quantum extension.

The quiet acceleration

Quantum computing is still a long road. The terrain remains uncertain, the instruments temperamental. But with faster communication and real-time feedback, the scouts can finally move with rhythm instead of hesitation. But for once, the road feels clearly marked.

No one can yet see the full map of this new world. What's changed is how quickly it's being drawn.

And in that quiet acceleration -- not a breakthrough, but a better conversation between explorers -- Nvidia once again found the place where progress hides: in the space between discovery and control.

What this could mean for Nvidia

Nvidia's move isn't about building a quantum computer; it's about owning the bridge every quantum effort will need.

• Near term: No revenue surge, but tighter ties with national labs and deep-tech start-ups.
• Medium term: The CUDA platform becomes the training ground where AI and quantum learn to work together -- a new moat forming quietly around Nvidia's data center dominance.
• Long term: If quantum delivers on climate forecasting, drug discovery, or clean energy materials, Nvidia is positioned to sell the picks, shovels, and maps to every explorer.

In the near term, Nvidia faces no equal hybrid competitor. Long term, IBM and Microsoft are the most credible threats -- one at the hardware-software integration layer, the other at the cloud orchestration layer -- but both are still years from challenging Nvidia's lead in AI-based hybrid compute.

For investors, the takeaway is simple: Quantum remains speculative, but infrastructure usually wins first. Nvidia just made itself indispensable to a field that's still learning to stand -- and that's the kind of patience that compounds.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Several artificial intelligence (AI) chip stocks saw broad sell-offs in Monday's trading. Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Micron (NASDAQ: MU) were among the big names participating in the pullback and were down 1.97%, 3.36%, and 4.31%, respectively, as of market close.

Semiconductor stocks were getting hit with a wave of bearish pressures following news that the U.S. will take new steps to limit the export of advanced chips used for AI. Nvidia, Micron, and TSMC occupy important positions in the AI chip space, and each company saw a significant valuation pullback today.

Nvidia, Micron, and TSMC fall on expanded AI chip regulations

Before the market opened this morning, U.S. officials announced they would be implementing new regulations that will put additional restrictions on the export of AI chips and semiconductor manufacturing equipment. The move is aimed at maintaining technological advantages for the U.S. and its allies and limiting AI progress for China and other adversarial countries.

The new regulations will put a hard cap on the number of AI chips that can be exported to countries including China, Russia, Iran, and North Korea. Meanwhile, close U.S. allies will have unrestricted access to advanced semiconductors and manufacturing equipment for artificial intelligence technologies. The new regulations will take effect 120 days after their initial publication.

Given the news, it's not surprising that Nvidia, Micron, and TSMC saw sell-offs today. While each company operates in a different corner of the semiconductor industry, they're all playing an important role in the design and production of advanced processors that are at the foundations of the AI revolution.

Nvidia is the leading designer of high-performance graphics processing units (GPUs) for AI data centres. While there are other players in the space, the company has a dominant technology and market share lead and stands as the most influential hardware designer in the space. Restrictions were already in place that prevented the company's most advanced processors from being shipped to China, and the new regulations look poised to expand the breadth of the export limitations.

Meanwhile, Micron is a leading producer of memory solutions. The company's high-bandwidth memory (HBM) chips are included in some of Nvidia's most advanced processors, and other memory and storage solutions from the tech specialist are also being used in AI data centers.

Compared to Nvidia and TSMC, Micron could wind up seeing less direct impacts from the new regulations. But while it's possible that the company's memory chips won't be specifically included in the expanding ban list, the business could still wind up facing a tougher growth environment because its chips are included as components in processors from Nvidia and other AI leaders.

TSMC's position amid rising tensions between the U.S. and China could be particularly fraught. TSMC dominates the market when it comes to the manufacturing of advanced AI chips. While there are many companies that design their own semiconductors, very few have the capacity to fabricate their own chips.

Because TSMC offers technological performance and reliability advantages, most AI chip designers choose the company to manufacture their chips. As a Taiwan-based company, TSMC has close geographical proximity to China and has become a centerpiece in the country's increasingly adversarial relationship with the U.S.

What does the U.S.-China dynamic mean for Nvidia, Micron, and TSMC?

Geopolitical dynamics are perhaps the single most important risk factor for AI chip investors. While near-term demand in the space continues to look robust and the long-term growth outlook remains very strong, rising tensions between the U.S. and China could create substantial valuation pressures. Along those lines, developments concerning Taiwan and TSMC are particularly important.

China has long held that Taiwan is part of its territory -- a position that the government of the relatively small island nation disagrees with. With TSMC the world's leading manufacturer of high-performance AI chips, the dispute has taken on added significance.

Leadership in AI has emerged as a key national security and economic issue, and TSMC's dominance when it comes to advanced chip fabrication means that it is one of the world's most important companies. If China were to move to exert greater control over Taiwan and TSMC's chip fabrication plants, it would likely create powerful bearish pressures on AI chip stocks and the market at large. While it's not clear that such a scenario will necessarily play out, geopolitical risks are a key factor that could shape the performance of some of the market's hottest artificial intelligence stocks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The proliferation of artificial intelligence (AI) has turned out to be a huge catalyst for the semiconductor industry, and that's not surprising as training and moving AI models into production is possible only through chips that are being deployed in huge numbers in data centers.

This is the reason why Nvidia (NASDAQ: NVDA) has witnessed a massive spurt in demand for its graphics processing units (GPUs). The ability of GPUs to process huge amounts of data simultaneously has made them the default choice for cloud service providers to train large language models (LLMs). This explains why Nvidia's data center business has been growing at a phenomenal pace over the past few quarters and is expected to get even bigger in the future.

However, GPUs aren't the only kind of chips that are in terrific demand thanks to the surge in AI adoption. Micron Technology (NASDAQ: MU), a manufacturer of memory chips, has also been winning big from the growing adoption of AI. This article takes a closer look at how AI has been driving Micron's business and examines why this memory specialist looks like a better AI stock to buy right now when compared to Nvidia.

Micron Technology is benefiting from AI adoption in multiple areas

Micron Technology released its fiscal 2024 fourth-quarter results (for the three months ended Aug. 29) on Sept. 25. The company's revenue shot up 93% year over year to $7.75 billion, exceeding the consensus estimate of $7.65 billion. Additionally, Micron swung to a profit of $1.18 per share last quarter as compared to a loss of $1.07 per share in the same period last year. Analysts were expecting the company to deliver $1.11 per share in earnings.

It wasn't surprising to see Micron crushing Wall Street's estimates as the memory market's dynamics have been improving because of AI. For instance, the demand for Micron's data-center memory chips is exceeding supply, and that's not surprising as these chips are used by the likes of Nvidia while manufacturing their GPUs. More specifically, AI-focused GPUs are equipped with high-bandwidth memory (HBM) chips thanks to their ability to process huge amounts of data quickly.

This is the reason why Micron expects the HBM market to generate annual revenue of $25 billion in 2025 as compared to just $4 billion last year. The company also adds that it sold "several hundred millions of dollars" worth of HBM last year, and it has sold out its HBM capacity for next year already.

Meanwhile, the adoption of AI is also leading to an improvement in the demand for solid-state drives (SSDs) used in data centers. Micron's data center SSD revenue tripled in fiscal 2024. It won't be surprising to see Micron maintaining impressive growth in this segment in the future as the deployment of AI servers is expected to drive an average annual growth of 60% in data-center SSD demand in the coming years, according to market research firm TrendForce.

However, this isn't where Micron's AI-related catalysts end. The adoption of AI-enabled PCs is going to be another solid growth driver for the company, driving impressive growth in volumes in both compute and storage-memory chips. On its latest earnings conference call, Micron CEO Sanjay Mehrotra remarked:

AI PCs require a higher capacity of memory and storage. As an example, leading PC OEMs have recently announced AI-enabled PCs with a minimum of 16GB of DRAM for the value segment and between 32GB to 64GB for the mid and premium segments, versus an average content across all PCs of around 12GB last year.

A similar scenario is unfolding in the smartphone market, where Micron points out that Android original equipment manufacturers (OEMs) are launching AI smartphones with 12 gigabytes (GB) to 16GB of dynamic random access memory (DRAM), up from the average capacity of 8GB seen in 2023 flagship smartphones.

IDC estimates that the market for generative AI smartphones could grow at an annual rate of 78% through 2028. On the other hand, Gartner estimates that AI PC shipments could jump a whopping 165% next year. The stunning growth of these end markets presents a bright multiyear opportunity for Micron to grow its sales and earnings thanks to the increase in memory consumption by AI-enabled edge devices, such as smartphones and PCs.

All this indicates that Micron is a more diversified AI stock than Nvidia, as it stands to gain from the adoption of this technology in several ways beyond just data centers. Even better, Micron's forecast suggests that it is about to clock faster growth than its illustrious peer.

Micron's guidance and valuation make it a top AI stock to buy right now

Micron is coming off a terrific fiscal Q4 with remarkable growth in its top and bottom lines. The company expects the momentum to continue in fiscal 2025's Q1. It has guided for $8.7 billion in revenue in the current quarter along with adjusted earnings of $1.74 per share at the midpoint.

The top-line guidance points toward an 85% year-over-year increase, while the bottom line would be a big improvement over the year-ago period's non-GAAP loss of $0.95 per share. For comparison, Nvidia is expecting its top line to grow 80% year over year in the current quarter. That was one of the reasons why investors pressed the panic button after its latest results as the chipmaker has been consistently delivering triple-digit growth in the past few quarters.

What's more, Micron's valuation means that investors looking to add an AI stock to their portfolios right now would do well to buy it right away over Nvidia. Micron's forward price-to-earnings ratio of 11 is significantly lower than Nvidia's forward-earnings multiple of 44, making the former a no-brainer investment right now, considering its eye-popping growth.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Some of the biggest drivers of the ongoing market rally that began early last year are the advances in artificial intelligence (AI). These next-generation algorithms and the semiconductors that power them could spark a wave of increased productivity.

The potential to profit from these advances has fueled rapid adoption of AI, which has sent purchases of semiconductors soaring. However, the chip industry could be among the first to feel the impact of the just-announced dockworkers' strike.

With that as a backdrop, AI chip specialist Nvidia (NASDAQ: NVDA) slumped 3.9%, memory and storage chipmaker Micron Technology (NASDAQ: MU) tumbled 3.9%, semiconductor specialist Broadcom (NASDAQ: AVGO) fell 3.1%, and database and AI chipmaker Oracle (NYSE: ORCL) dropped 1.9%, in mid-afternoon trade (in the United States) on Tuesday.

A check of all the usual suspects -- financial reports, regulatory filings, and changes to analysts' price targets -- showed nothing in the way of company-specific news to explain the falling stock prices. This suggests investors were focused on the work stoppage at some of the biggest ports in the United States and what that means for the semiconductor industry and the market rally in general.

Strike while the iron is hot

On Tuesday, the International Longshoremen's Association (ILA) began its first widespread strike in almost 50 years. The union said that tens of thousands of its members began to hit picket lines at ports along the Atlantic and Gulf coasts at 12.01am.

More than half of the containerised products imported into the country are destined for the ports on those two coasts. If the strike lasts more than a few days, it could have a ripple effect on the supply chain and, by extension, the broader economy.

Delays in everyday products could reignite inflation, cause shortages, and drive up prices. The longer the strike lasts, the more likely the chance of economic upheaval.

Governor Kathy Hochul of New York said that "the food supply is secure right now," urging consumers not to stockpile items unnecessarily. While a shortage of essential goods like food and household items is still weeks away, other industries could be affected, including semiconductors.

The accelerating adoption of AI has already caused many of the most advanced chips to be in short supply. As a result, a shortage of semiconductors resulting from the dockworkers' strike could come sooner rather than later.

Years, not weeks or months

So, what's the potential impact on our quartet of companies? In the near term, a disruption in the semiconductor pipeline could slow revenue and profit growth. Over the long term, however, any impact would be fleeting at most.

Many AI and semiconductor stocks have been bid up since early last year as investors feared missing out on the next big trend. If a shortage of chips comes to pass due to this strike, it will likely be short-lived, and the pent-up demand will remain once the strike has passed.

Investors should stay focused on AI's long-term opportunity, which will play out over years, not weeks or months. The most advanced semiconductors power this technology, so the future remains bright for these chip industry pillars.

• Nvidia created the graphics processing units (GPUs) that provide the computational horsepower used in AI systems.
• Broadcom creates many of the semiconductors and ancillary technology used in data centres and cloud computing, where much of AI occurs.
• Oracle is primarily known for its database and cloud infrastructure services, but it also designs and engineers chips used for AI.
• Micron Technology makes flash memory and storage processors, which are crucial components in the GPUs that are used for AI processing.

Some of these stocks might appear pricey at first glance, but any premium is well deserved. Nvidia, Broadcom, Oracle, and Micron are currently selling for 41 times, 35 times, 27 times, and 11 times forward earnings, respectively. However, given the accelerating adoption of AI and the corresponding accelerating growth of these companies (all of which provide components that are crucial to the AI revolution), I would rate them all buys.

That said, each of these stocks carries increased volatility, and the potential for supply chain disruption could further exacerbate that situation. Investors should hold on for a wild ride.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There's been an increased focus on the semiconductor industry since early last year. Investors have been enthusiastic about recent developments in the field of artificial intelligence (AI), which has sparked a flurry of activity in the space.

These powerful algorithms are highly dependent on hardware that features the most advanced processors, which has buoyed much of the sector. However, after a sharp run-up, many AI stocks have been treading water over the past several months as investors have waited for evidence the trend still has room to run.

With that as a backdrop, it's noteworthy that in trading (in the United States) on Thursday, Taiwan Semiconductor Manufacturing (NYSE: TSM) had climbed by 1.9%, ASML Holding (NASDAQ: ASML) had rallied 3.7%, and Indie Semiconductor (NASDAQ: INDI) had jumped 7.4% as of 12:46 p.m. ET.

A check of all the usual suspects -- regulatory filings, financial reports, and changes to analysts' price targets -- turned up nothing in the way of company-specific news to explain those stock price increases. This suggests that investors were reacting to the financial results from another player in the AI revolution, and that the news was good.

A flurry of activity

Micron Technology (NASDAQ: MU) released its fiscal 2024 fourth-quarter report after the closing bell Wednesday, and investors let out a collective cheer.

In the period, which ended Aug. 29, the computer memory specialist's revenue soared 93% year over year to $7.75 billion -- a company record -- while also increasing 14% sequentially. This resulted in adjusted earnings per share (EPS) of $1.18, much improved from its loss of $1.07 per share in the prior-year quarter.

Driving those results was surging demand for high-bandwidth memory of the type used in data centers and AI, which boosted Micron's profit margins.

The results sailed past Wall Street analysts' consensus expectations for revenue of $7.65 billion and adjusted EPS of $1.11.

It wasn't just the robust results that drove the stock higher, as Micron's forecast suggested the growth spurt would continue. For its fiscal 2025 first quarter, management is guiding for revenue of $8.7 billion, which would equate to growth of 84% year over year, and adjusted EPS of $1.74, which would be an increase of 83%.

Management cited strong AI data centre demand in driving sales growth for its DRAM memory and NAND flash-based storage.

The subsequent run-up in other stocks in the chip space suggests that investors view Micron's report as convincing evidence that the demand for AI and the hardware to support it is ongoing. They also clearly view these developments as positive for a broad cross-section of companies in the AI space.

A positive for chipmakers

Micron's robust results should help dispel any notion that demand for AI is waning. It's also not surprising that each of the companies in our trio has a specialty connected to the specific types of semiconductors that will benefit from the growing adoption of AI.

• Taiwan Semiconductor Manufacturing is the world's largest third-party chipmaker. Strong demand for the world's most advanced chips is fueling the foundry's pipeline and strong growth.
• ASML Holding is the only company able to build the advanced lithography systems that chipmakers must use to manufacture the highest-end semiconductors, so it's also benefiting from these secular tailwinds.
• Indie Semiconductor specialises in the types of processors used in automobiles, powering advanced driver-assistance systems, as well as various connected-car and in-cabin systems. It's also developing customized AI solutions for carmakers.

The evidence suggests the accelerating adoption of AI will continue to increase the fortunes of companies in the semiconductor space. It's worth noting, however, that all AI stocks are not created equal.

From a valuation perspective, Taiwan Semiconductor and ASML are inexpensive, selling for 22 times and 25 times forward earnings, respectively. Indie Semiconductor, on the other hand, isn't profitable, making it a much riskier investment.

That said, each of these stocks has intriguing potential, particularly given the continuing opportunities in the AI space.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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