Is Ultra Clean Holdings (UCTT) Well Positioned to Increase Its Market Share Over the Long Term?

Frontier Capital Management, an investment management company, released its “Frontier Small Cap Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Class N shares of the fund returned -14.43% in the first quarter, compared to -11.12% for the benchmark Russell 2000 Growth Index. The fund returned -14.50% for the 12 months ended March 31, 2025, compared to the benchmark return of -4.86%. US equities traded lower in the first quarter, mainly during the last week of the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first quarter 2025 investor letter, Frontier Small Cap Growth Fund highlighted stocks such as Ultra Clean Holdings, Inc. (NASDAQ:UCTT). Ultra Clean Holdings, Inc. (NASDAQ:UCTT) develops critical subsystems, components and parts, and ultra-high purity cleaning and analytical services for the semiconductor industry. The one-month return of Ultra Clean Holdings, Inc. (NASDAQ:UCTT) was 21.91%, and its shares lost 51.25% of their value over the last 52 weeks. On July 3, 2025, Ultra Clean Holdings, Inc. (NASDAQ:UCTT) stock closed at $25.26 per share, with a market capitalization of $1.14 billion.

Frontier Small Cap Growth Fund stated the following regarding Ultra Clean Holdings, Inc. (NASDAQ:UCTT) in its first quarter 2025 investor letter:

“Another underperformer was Ultra Clean Holdings, Inc. (NASDAQ:UCTT), a manufacturer of critical subsystems and services for semiconductor capital equipment manufacturers and semi fabs. While Ultra Clean’s December quarter results exceeded consensus expectations, its outlook for the March quarter disappointed due to product qualification delays at a top Chinese customer and weakening semiconductor equipment demand in China. Management expects the qualification delays to be resolved soon and still anticipates overall company sales to outpace semiconductor wafer fabrication equipment (WFE) industry spending in 2025. Longer term, Ultra Clean is well positioned to gain market share through new design wins at top-tier semi cap equipment manufacturers.”

Ultra Clean Holdings, Inc. (UCTT): Among Small-Cap Stocks Insiders Were Buying in Q1 2025

A technician inspecting a series of critical ultra-high purity components.

Ultra Clean Holdings, Inc. (NASDAQ:UCTT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Ultra Clean Holdings, Inc. (NASDAQ:UCTT) at the end of the first quarter, compared to 22 in the fourth quarter. Ultra Clean Holdings, Inc. (NASDAQ:UCTT) reported revenue of $518.6 million in the first quarter, compared to 563.3 million last quarter. While we acknowledge the potential of Ultra Clean Holdings, Inc. (NASDAQ:UCTT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Ultra Clean Holdings, Inc. (NASDAQ:UCTT) and shared the list of semiconductor stocks plunging so far in 2025. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of UCTT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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