We recently published a list of the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts. In this article, we are going to take a look at where Nova Ltd. (NASDAQ:NVMI) stands against other best semiconductor equipment stocks to buy according to analysts.

As per Straits Research, the US semiconductor manufacturing equipment market size was pegged at US$13.2 billion in 2024. It is expected to grow from US$13.5 billion in 2025 to US$16.5 billion by 2033. This growth is expected to stem from increasing investments in domestic semiconductor manufacturing and the higher demand for advanced semiconductors in critical sectors, including artificial intelligence (AI), 5G, and EVs.

Market Drivers for Semiconductor Manufacturing Equipment

Straits Research highlighted that the resurgence of semiconductor manufacturing in the US is aided by the government initiatives. The federal push is targeted at reducing the dependency on Asian imports as well as strengthening the domestic supply chains. Leading companies continue to establish new fabs in the US, which helps create demand for advanced wafer manufacturing and fabrication equipment. Overall, the increased requirement for high-performance chips in sectors including defense, telecommunications, and automotive further cements the growth of semiconductor equipment.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Growth Opportunities for Semiconductor Equipment

The rapid adoption of AI and 5G technologies in the United States continues to present strong opportunities for the broader semiconductor manufacturing equipment market, highlighted Straits Research. AI chips, primarily the ones utilized in data centers and autonomous vehicles, need advanced manufacturing techniques, fueling demand for cutting-edge equipment. Furthermore, the launch of 5G networks has been driving rapid production of semiconductors, which are capable of handling higher data transmission rates, further enhancing the need for advanced fabrication technology. The US is well-placed as a leader in AI and 5G development, with leading companies driving innovation, demonstrating strong growth potential.

KPMG believes that Al is now the most important application fueling semiconductor companies’ revenue as businesses continue to incorporate the technology in their digital transformations. As a result, the spending on Al semiconductors is projected to be $174 billion in 2025, which is expected to increase to $280 billion in 2028. KPMG also highlighted that semiconductor leaders opine that Al enablers (which include high-bandwidth memory) are the production technology that can have an impact on the broader industry over the upcoming 3 years. In an era in which Al applications are present in all the industries – ranging from autonomous vehicles to healthcare diagnostics, household devices to personalized recommendations—there remains a higher demand for semiconductors aiding Al capabilities.

Our Methodology

To list the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts, we used a screener to shortlist the companies catering to the broader semiconductor equipment market. Next, we filtered out the stocks that analysts see significant upside to. The stocks are arranged in ascending order of their average upside potential, as of April 9. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Nova Ltd. (NASDAQ:NVMI)

Average Upside Potential: ~69.9%

Number of Hedge Fund Holders: 26

Nova Ltd. (NASDAQ:NVMI) designs, develops, produces, and sells process control systems utilised in the manufacturing of semiconductors. The company has seen broad adoption of its comprehensive portfolios. As per the firm, leading foundries, logic, and memory manufacturers continue to integrate multiple NOVA solutions from its optical dimensions, materials, and chemical metrology portfolio. Therefore, the adoption cements its ability to address the complex metrology challenges associated when manufacturing the most advanced semiconductor nodes. Nova Ltd. (NASDAQ:NVMI) has completed the acquisition of Sentronics Metrology GmbH, which is a global provider of wafer metrology tools for backend semiconductor fabrication.

Nova Ltd. (NASDAQ:NVMI) expects the acquisition to be accretive on a non-GAAP net earnings basis in the 12 months of closing. The Sentronics portfolio expands the company’s presence in the broader range of applications and wafer sizes and types beyond 300mm silicon wafers. Overall, the growth in the semiconductor equipment market supports Nova Ltd. (NASDAQ:NVMI) by improving demand for its advanced metrology solutions. These are important for controlling critical dimensions as well as materials in next-gen chip manufacturing.

Invesco Distributors, Inc., an investment management firm, released Q2 2024 investor letter. Here is what the fund said:

“Nova Ltd. (NASDAQ:NVMI) provides integrated monitoring and process control systems for other integrated circuit manufacturing processes. Wafer fab spending has been on the rise due to high memory prices and AI spending, resulting in strong earnings results for Nova.”

Overall, ABC ranks 5th on our list of best semiconductor equipment stocks to buy according to analysts. While we acknowledge the potential of ONTO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than ONTO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.