Global Trends

AI is hot; today’s craze is just the tip of the iceberg. While large language models, generative AI, and image-producing algorithms are neat, the next phase of AI will start generating cash flow for companies other than NVIDIA (NASDAQ: NVDA) and the data center group in which generative AI is grounded.

That phase is AI's industrialization, which will be facilitated by the IoT, edge computing, and computer vision stocks like the ones listed here.

These are the leading players in computer vision. Computer vision is an industry that the mass-market embedding of AI technologies such as autonomous driving, smart warehouses, and consumer products will drive.

The question isn’t if these stocks have a catalyst; it’s when the market for computer vision chips will boom, and it should be soon. As it is, the industry is looking at a 20% CAGR over the next 5 to 10 years.

Ambarella is the Leader in Computer Vision

Ambarella (NASDAQ: AMBA) shifted focus to edge computing, the IoT, and the industrialization of computer vision a few years ago. That shift is paying off, evidenced by traction in the automobile and industrial arenas. Ambarella's goal is to make cameras smarter; its processors and dedicated vision processing algorithms can extract data from high-resolution images that can be used to detect and classify objects.

Applications run from mass-market IoT applications through robotics, autonomous vehicles, and security. Features of Ambarella products include stereo vision and high-resolution imaging with low power and bandwidth consumption.

Price action in AMBA stock corrected over the past year along with the semiconductor industry inventory normalization. Normalization resulted in YOY revenue declines, but the company has outperformed, and growth should resume in the next fiscal year.

Analysts expect revenue to jump more than 25% and margins to widen significantly. Analysts rate the stock a Moderate Buy with a consensus target near $94. The consensus is down compared to last year but firmed since the last earnings report, implying about 35% upside.

CEVA, Inc. Licenses Technology to OEMs

CEVA, Inc. (NASDAQ: CEVA) is another computer vision and AI-focused company banking on embedding CV technology. The company develops and acquires CV and AI technology with the intent of licensing it to OEMs. The company’s products include processors and the software to operate them.

CEVA, Inc. products consist of AI, computer vision processors, and deep neural network toolkits to optimize performance and power consumption, 1 of the largest hurdles to the widespread use of advanced CV technology. CEVA, Inc. is rated Moderate Buy with a price target of $30.86. The target is still trending lower but is about 45% above the current price action, and the low target assumes fair value at the current price point.


Cognex Corporation; Embed Computer Vision Technology Today

Cognex Corporation (NASDAQ: CGNX) manufactures a computer vision and sensing hardware line. The company’s focus is the industrial applications of CV and the IoT, including logistics, the automotive industry, and automation/robotics.

Recent results have been weak due to reduced spending by end-market users, but the long-term outlook is robust. Cognex is also a dividend-paying stock, with a yield near 0.6%. The yield isn’t large, but it is reliable and growing.


LightPath Makes Optical Components and Assemblies

When the OEMs ramp up demand for CV products, LightPath (NASDAQ: LPTH) will be ready to manufacture the components and assemblies. The company is a leader in optics and optical components, including CV and AI-powered technology. Its products are used in the healthcare profession, defense applications, industrial tools, and automotive.

The caveat is that this is a penny stock with less than $100 million of annual revenue. That risk aside, the company is expected to grow revenue by 17% next year, aided by expansion. The company is in the process of building another facility to help it deliver on the growing backlog.

Himax Technologies, Inc.- High-Yield Opportunity

Himax Technologies (NASDAQ: HIMX) provides a wide range of products and services related to computer vision and display. The company's AI-powered computer vision applications include the WE1-Plus Ultra-low power microprocessor. This SoC includes interfaces for Himax's AO sensing (always-on) devices for quick power-up and image capturing.


Himax pays a dividend with a high yield, but the payout is erratic in size due to the distribution plan. The analysts rate Himax a Buy and see it moving 20% to 30% higher
https://www.nasdaq.com/articles/5-computer-vision-stocks-with-a-clear-path-to-growth
Ambarella
CEVA, Inc.
Cognex Corporation
LightPath
Himax Technologies

NEW DELHI, Feb 29 (Reuters) - India gave the go-ahead to construction of three semiconductor plants worth 1.26 trillion rupees ($15.2 billion) by firms including Tata Group and CG Power on Thursday, as the country pursues its goal of becoming an electronics powerhouse.
India, which is seeking to rival countries such as Taiwan in chipmaking, expects its semiconductor market to be worth $63 billion by 2026, but does not yet have a chipmaking facility.
Prime Minister Narendra Modi wants to make India a chipmaker for the world as his government tries to overcome setbacks faced in its bid to offer $10 billion in incentives to the industry.
Indian Electronics Minister Ashwini Vaishnaw said construction will begin on the plants within the next 100 days, adding that they will manufacture and package chips for sectors including defence, automobiles and telecommunication.
"This is a big decision for the country and a key accomplishment towards making India a self-dependent country," Vaishnaw told reporters.
He did not give updates on other key chipmaking applicants, opens new tab, including Indian conglomerate Vedanta (VDAN.NS), opens new tab, Taiwan's Foxconn (2317.TW), opens new tab and Israel's Tower Semiconductor (TSEM.TA), opens new tab.
Tata will partner with Taiwan's Powerchip (6770.TW), opens new tab to set up India's first chipmaking plant worth 910 billion rupees in Gujarat state's Dholera, he said, while CG Power (CGPO.NS), opens new tab will partner with Japan's Renesas Electronics Corp (6723.T), opens new tab and Thailand's Stars Microelectronics (SMT.BK), opens new tab for a 76 billion rupees chip packaging plant, also in Gujarat.
A third chip packaging plant worth 270 billion rupees will be set up in the eastern state of Assam by Tata unit Tata Semiconductor Assembly and Test Pvt Ltd, Vaishnaw added.
https://www.reuters.com/technology/india-approves-three-chipmaking-units-worth-152-bln-2024-02-29/
SEOUL, Feb 29 (Reuters) - South Korean President Yoon Suk Yeol met Meta's (META.O), opens new tab CEO Mark Zuckerberg on Thursday for talks to explore ways to increase cooperation with the U.S. company in artificial intelligence (AI) and digital ecosystems, Yoon's office said.
Yoon said South Korea's portfolio of smart home appliances, wearable devices and smart cars offered a good platform for Meta's AI technology.
The president also promised support for business tie ups and expressed hope for greater collaboration in areas like the metaverse and extended reality (XR) headsets, it said.
"The two discussed the vision for creating open AI and digital ecosystems and how to strengthen cooperation between Meta and our companies," Yoon's policy chief, Sung Tae-yoon, told a briefing.
"The president said that the Korean industry is ready to actively support what Meta has imagined and designed."
Yoon also asked Meta to play an active role monitoring and countering fake news and other malpractices on its platforms as many countries gear up for elections this year, Sung said.
On Wednesday, Zuckerberg met Samsung Electronics (005930.KS), opens new tab Chairman Jay Y. Lee and LG Electronics (066570.KS), opens new tab CEO William Cho to discuss potential cooperation in AI and XR technology.
Meta launched its latest mixed-reality headset, Quest 3, in June before rival Apple (AAPL.O), opens new tab ramped up competition this month with its Vision Pro device.
AI chip supply and expanding ecosystems for generative AI are key priorities for Meta this year, as the company seeks to get generative AI technology into its social media products and hardware devices.
South Korea has announced measures to foster local AI development, including investments to provide text data for large language models, core AI technology and large-capacity computing resources, as well as projects to embed AI, according to the Ministry of Science and ICT.
South Korea will host a global AI Safety Summit in May.
Zuckerberg is on his first publicly known visit to South Korea in about 10 years, as part of an Asian tour that includes stops in Japan and India.

https://www.nasdaq.com/articles/exclusive:-marc-chaikin-bullish-on-ai-enhanced-software-companies-forecasts-sp-500-rally
https://www.nasdaq.com/articles/exclusive:-marc-chaikin-bullish-on-ai-enhanced-software-companies-forecasts-sp-500-rally
Marc Chaikin - Wikipedia
Marc Chaikin is a stock analyst and Founder and CEO of Chaikin Analytics , LLC. He is also the founder of Bomar Securities LP, which was sold to Instinet Corp. in 1992. He then went on to become Senior Vice President and Director at Instinet when owned by Reuters.com .
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Chaikin Analytics - Put the Power of Wall Street in Your Hands - Chaikin Analytics
Chaikin Analytics - After 50 years on Wall Street, Marc Chaikin founded Chaikin Analytics to put the power of Wall Street in your hands.
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