Why This AI Stock Surged 363% in Just 1 Year

This AI stock has surged this year by almost 400%! And yet this could only be the beginning for this semiconductor stock.

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Investors have seen many growth stocks take off in the last year. But perhaps no more than those related to artificial intelligence (AI) – and specifically, the companies that support the growth of AI.

Which is why one company has surged 363% in the last year alone. That’s even more than other companies making headlines. And before you think it’s some penny stock, let me tell you. You couldn’t be more wrong.

Semiconductor madness

While you might think that an AI stock will be related directly to AI, it doesn’t have to be to see growth. One area is the semiconductor sector. Semiconductors are the backbone of modern computing and play a crucial role in the development and operation of AI systems. 

Semiconductors, especially in the form of microchips and integrated circuits, provide the computational power necessary for AI algorithms to perform complex tasks. AI models, such as neural networks, require massive amounts of computational resources for training and inference, and semiconductor technology enables the creation of high-performance processors and accelerators that can handle these workloads efficiently.

Furthermore, as AI algorithms become more sophisticated, there is a growing demand for specialized hardware optimized for AI workloads. This has led to the development of AI-specific semiconductor technologies, such as Graphics Processing Units (GPUs), Tensor Processing Units (TPUs), and Field-Programmable Gate Arrays (FPGAs), which are designed to accelerate AI computations and improve energy efficiency.

A stock getting in on the action

In this case, the AI stock that has seen so much growth from the rising need of semiconductors is Celestica (TSX:CLS). Celestica operates in the electronics manufacturing services (EMS) industry, providing design, manufacturing, and supply chain solutions for a range of industries, including semiconductors. As demand for semiconductors surges, companies like Celestica may benefit from increased orders for semiconductor manufacturing, assembly, and testing services.

Furthermore, Celestica’s portfolio of services may extend beyond semiconductors to include other areas relevant to AI development, such as IoT devices, edge computing solutions, and data centre infrastructure. A diverse range of offerings allows Celestica to cater to the broader needs of companies involved in AI and semiconductor industries.

Finally, Celestica stock has been one of the benefactors coming out of the COVID-19 pandemic. The disruptions caused by the COVID-19 pandemic highlighted the importance of resilient supply chains, particularly in industries reliant on semiconductors and AI technologies. Celestica’s ability to navigate supply chain challenges and maintain operational continuity may have contributed to its stock performance.

Bottom line

While Celestica stock has already seen growth, there is certainly more to come for this high-growth stock. That being said, it’s one I would potentially watch and jump in at a dip in the market. Overall, however, the combination of semiconductor and AI technology growth positions Celestica for strong growth – enough that it should continue to climb for years if not decades to come. So certainly add it to your watchlist on the TSX today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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